UnitedAuto Reports Record Fourth Quarter and Year
BLOOMFIELD HILLS, Mich.--Feb. 1, 20047, 2004--United Auto Group, Inc. :-- Q4 Revenues Increase 18.4%
-- Q4 Income Increases 44.1% to $20.1 Million
-- Q4 Earnings Per Share Increases 41.2% to $0.48 Per Share
-- Q4 Same-Store Retail Revenues Increase 7.1%
-- Full Year Earnings Per Share Increases 16.3% to $2.07
-- Company to Raise $119.4 Million by Issuing 4,050,000 New Shares In Private Placement
United Auto Group, Inc. , a FORTUNE 500 automotive specialty retailer, today announced record results for the fourth quarter and full year 2003, including double digit growth in revenues, income and earnings per share.
Revenues for the fourth quarter increased 18.4% to a record $2.2 billion, driven by a 7.1% increase in same-store retail revenues. Importantly, the Company announced that same-store growth increased 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 7.7%, 5.1%, 8.2% and 3.9%, respectively. Record income from continuing operations was $20.1 million and related earnings per share was $0.48, representing increases of 44.1% and 41.2%, respectively, before the effect of a $22.8 million ($13.6 million after-tax), or $0.33 per share, one-time charge recorded in fourth quarter 2002. Net income for the quarter increased to $20.1 million, or $0.48 per share, from $0.7 million, or $0.02 per share, in the prior year.
For the twelve months ended December 31, 2003, revenues increased 20.3% to a record $8.7 billion, driven by a 6.5% increase in same store retail revenues. Income from continuing operations was $85.7 million, up 16.9%, and related earnings per share grew 16.3% to $2.07. Net income was $82.9 million and earnings per share was $2.00. Net income for the twelve months includes the effect of 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, "United Auto delivered another record setting quarter, our 19th consecutive quarter of reporting record results. During the past five years our industry leading same-store retail revenues have increased by an average of 7.9%, including a 7.2% increase in our high margin service and parts revenues. This sustained record of same-store sales growth, particularly in our parts and service operations, demonstrates the returns we are experiencing as a result of our continued investment in high quality franchises and world class facilities."
The Company also announced a definitive agreement to sell 4,050,000 shares of common stock to Mitsui & Co. Ltd. and Mitsui & Co. (U.S.A) in a private placement for approximately $119.4 million. The selling price of $29.49 per share is based on the average closing price of the Company's common stock over the 20 trading days preceding February 16, 2004. The transaction, which is subject to shareholder approval and other customary conditions, is expected to close by the end of the first quarter.
Commenting on the private placement transaction with Mitsui, Penske added, "The additional capital provided by this transaction strengthens our balance sheet by reducing our leverage, and provides funds for future acquisitions and selected capital investments."
Penske continued, "Today I am pleased to provide guidance relating to our 2004 operations. Prior to the transaction with Mitsui, we estimate earnings per share in the range of $2.28-$2.38 per share, based on an average 42.0 million shares outstanding. Adjusted to reflect the closing of the private placement, earnings per share are estimated to be in the range of $2.17-$2.27 per share, based on an average 45.0 million shares outstanding. For the first quarter of 2004, we expect earnings per share in the range of $0.43-$0.47 per share."
UnitedAuto will host a conference call discussing financial results relating to fourth quarter 2003 on Tuesday, February 17, 2004 at 2 P.M. Eastern time. To listen to the conference call, participants must dial (888) 428-4479 (International, please dial (612) 288-0318). The call will also be simultaneously broadcast live over the Internet through the UnitedAuto website at www.unitedauto.com.
UnitedAuto, which has pursued a strategy based on internal growth from its existing dealerships, as well as from strategic acquisitions, operates 138 franchises in the United States and 83 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. Statements in this press release involve forward-looking statements, including forward-looking statements regarding UnitedAuto's future sales, earnings growth potential and issuance of common stock. 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. The securities expected to be sold to Mitsui will not be, and have not been, registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
UNITED AUTO GROUP, INC.
Consolidated Statements of Income (Unaudited)
(Amounts In Thousands, Except Per Share Data)
Fourth Quarter
----------------------
2003 2002
----------------------
New Vehicles $1,265,731 $1,084,676
Used Vehicles 441,516 370,747
Finance and Insurance 47,932 43,141
Service and Parts 240,218 202,804
Fleet 21,271 17,537
Wholesale 145,551 107,533
----------------------
Total Revenues 2,162,219 1,826,438
Cost of Sales 1,850,740 1,561,807
----------------------
Gross Profit 311,479 264,631
SG&A Expenses 246,135 236,696
Depreciation and Amortization 8,620 6,337
----------------------
Operating Income 56,724 21,598
Floor Plan Interest Expense (11,916) (9,424)
Other Interest Expense (10,632) (10,618)
----------------------
Income from Continuing Operations Before
Minority
Interests and Income Tax Provision 34,176 1,556
Minority Interests (599) (580)
Income Tax Provision (13,500) (635)
----------------------
Income from Continuing Operations 20,077 341
Income from Discontinued Operations, Net of Tax -- 311
----------------------
Net Income $20,077 $652
======================
Income from Continuing Operations Per Diluted
Share $0.48 $0.01
======================
Diluted EPS $0.48 $0.02
======================
Diluted Weighted Average Shares Outstanding 42,059 41,037
======================
UNITED AUTO GROUP, INC.
Consolidated Statements of Income (Unaudited)
(Amounts In Thousands, Except Per Share Data)
Twelve Months
----------------------
2003 2002
----------------------
New Vehicles $5,052,529 $4,292,108
Used Vehicles 1,847,061 1,432,789
Finance and Insurance 206,903 171,016
Service and Parts 920,454 754,330
Fleet 114,490 108,241
Wholesale 530,048 451,314
----------------------
Total Revenues 8,671,485 7,209,798
Cost of Sales 7,428,065 6,181,580
----------------------
Gross Profit 1,243,420 1,028,218
SG&A Expenses 980,011 830,231
Depreciation and Amortization 31,583 21,547
----------------------
Operating Income 231,826 176,440
Floor Plan Interest Expense (43,527) (34,875)
Other Interest Expense (42,847) (38,300)
----------------------
Income from Continuing Operations Before
Minority
Interests and Income Tax Provision 145,452 103,265
Minority Interests (2,305) (1,963)
Income Tax Provision (57,456) (41,598)
----------------------
Income from Continuing Operations 85,691 59,704
Income from Discontinued Operations, Net of Tax 296 2,537
----------------------
Income Before Cumulative Effect of
Accounting Change 85,987 62,241
Cumulative Effect of Accounting Change (a) (3,058) --
----------------------
Net Income $82,929 $62,241
======================
Income from Continuing Operations Per Diluted
Share $2.07 $1.45
======================
Diluted EPS before Cumulative Effect of
Accounting Change $2.08 $1.51
======================
Cumulative Effect of Accounting Change on
Diluted EPS ($0.07) $--
======================
Diluted EPS $2.00 $1.51
======================
Diluted Weighted Average Shares Outstanding 41,434 41,161
======================
(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)
12/31/03 12/31/02
----------------------
Assets (unaudited)
Cash and Cash Equivalents $13,845 $10,641
Accounts Receivable, Net 347,802 310,378
Inventories 1,183,868 942,732
Other Current Assets 43,150 27,230
----------------------
Total Current Assets 1,588,665 1,290,981
Property and Equipment, Net 371,326 306,234
Intangibles 1,087,052 973,342
Assets of Discontinued Operations -- 53,085
Other Assets 90,138 66,672
----------------------
Total Assets $3,137,181 $2,690,314
======================
Liabilities and Stockholders' Equity
Floor Plan Notes Payable $1,138,476 $882,100
Accounts Payable and Accrued Expenses 350,254 271,036
Current Portion Long-Term Debt 8,574 14,979
----------------------
Total Current Liabilities 1,497,304 1,168,115
Long-Term Debt (a) 643,343 651,176
Other Long-Term Liabilities 168,122 135,036
Liabilities of Discontinued Operations -- 31,545
----------------------
Total Liabilities 2,308,769 1,985,872
Stockholders' Equity 828,412 704,442
----------------------
Total Liabilities and Stockholders' Equity $3,137,181 $2,690,314
======================
(a) Undrawn capacity under the Company's credit facilities amounted to
approximately $423 million as of December 31, 2003.
UNITED AUTO GROUP, INC.
Selected Data
Fourth Twelve
Quarter Months
--------------------------------------------
2003 2002 2003 2002
--------------------------------------------
Units
New Retail Units 40,336 37,698 170,664 153,730
Used Retail Units 20,422 18,638 88,316 73,944
--------------------------------------------
Total Retail
Units 60,758 56,336 258,980 227,674
============================================
Same-Store Retail Revenue
New Vehicles $1,137,947 $1,056,132 $3,906,526 $3,687,920
Used Vehicles 375,438 357,130 1,119,519 1,043,480
Finance and Insurance 38,243 36,793 147,774 132,802
Service and Parts 212,735 196,629 664,729 619,375
--------------------------------------------
Total Same Store
Retail Revenue $1,764,366 $1,646,684 $5,838,548 $5,483,577
============================================
Same-Store Retail Revenue
Growth
New Vehicles 7.7% (1.2)% 5.9% 5.0%
Used Vehicles 5.1% (4.6)% 7.3% (0.6)%
Finance and Insurance 3.9% 9.3% 11.3% 10.4%
Service and Parts 8.2% 7.5% 7.3% 5.9%
Revenue Mix
New Vehicles 58.6% 59.4% 58.3% 59.5%
Used Vehicles 20.4% 20.3% 21.3% 19.9%
Finance and Insurance 2.2% 2.4% 2.4% 2.4%
Service and Parts 11.1% 11.1% 10.6% 10.5%
Fleet 1.0% 1.0% 1.3% 1.5%
Wholesale 6.7% 5.8% 6.1% 6.2%
Retail Gross Margin - by
Product
New Vehicles 8.5% 8.6% 8.4% 8.5%
Used Vehicles 8.5% 9.5% 9.1% 9.9%
Finance and Insurance 100.0% 100.0% 100.0% 100.0%
Service and Parts 49.3% 47.7% 48.3% 47.1%
Gross Profit per
Transaction
New Vehicles $2,673 $2,466 $2,474 $2,366
Used Vehicles 1,829 1,889 1,902 1,913
Finance and Insurance 789 766 799 751
UNITED AUTO GROUP, INC.
Selected Data (Continued)
Fourth Quarter Twelve Months
----------------------------------
2003 2002 2003 2002
----------------------------------
Brand Mix:
Toyota/Lexus 22% 22% 22% 24%
BMW 14% 12% 13% 11%
Mercedes 11% 10% 10% 9%
Honda/Acura 10% 12% 11% 12%
General Motors 10% 13% 11% 13%
Ford Premier Group 8% 6% 8% 6%
Chrysler 7% 8% 7% 9%
Nissan/Infiniti 4% 4% 4% 5%
Ford 4% 4% 4% 5%
Other 10% 9% 10% 6%
Debt to Total Capital Ratio 44% 49% 44% 49%
Adjusted EBITDA (a) $53,428 $18,511 $219,882 $163,112
Rent Expense 22,210 18,622 84,342 63,924
(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:
Fourth Quarter Twelve Months
---------------------------------
2003 2002 2003 2002
---------------------------------
Income from continuing operations
before minority interests and
income tax
provision $34.2 $1.6 $145.5 $ 103.3
Other interest expense 10.6 10.6 42.8 38.3
Depreciation and amortization 8.6 6.3 31.6 21.5
---------------------------------
Adjusted EBITDA $53.4 $18.5 $219.9 $163.1
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