Group 1 Automotive Reports First-Quarter Earnings
HOUSTON--April 29, 2004--Group 1 Automotive, Inc. , a Fortune 500 specialty retailer, today reported first-quarter net income of $10.5 million, or $0.45 per diluted share. This includes an after-tax charge of $4.0 million, or $0.17 per diluted share, resulting from the previously announced redemption of the company's 10 7/8% senior subordinated notes in March 2004. Revenues for the quarter were $1.1 billion.First-Quarter Highlights:
-- New vehicle revenues increased 13.8 percent
-- Parts & service revenues grew 11.6 percent
-- Gross profit increased to $183.4 million from $169.4 million
-- Same store revenues increased 5.7 percent
Summary Results of Operations (Unaudited)
(In millions, except per share amounts)
Three Months Ended
March 31,
--------------------
2004 2003
---------- ---------
Revenues $1,147.0 $1,029.8
Gross Profit $183.4 $169.4
Income from Operations $32.7 $31.4
Net Income $10.5 $14.8
Diluted Earnings per Share $0.45 $0.64
Results for the First Quarter
During the first quarter, revenues grew 11.4 percent to $1.1 billion from $1.0 billion during the same period last year. Same store revenues increased 5.7 percent, compared with a 7.8 percent decrease in the first quarter of 2003.
"We delivered a second consecutive quarter of same store growth reflecting our continued focus on improving operations and the benefits of an improving used vehicle market," said B.B. Hollingsworth Jr., Group 1's chairman, president and chief executive officer.
Hollingsworth noted that from a brand standpoint Acura, Lexus, Infiniti and Nissan were among the strongest performers. "We had outstanding performances from our New Mexico and Central Texas platforms, and continued weak performance in Atlanta," he added.
New vehicle revenues grew 13.8 percent on a unit sales increase of 10.2 percent. Used vehicle retail revenues increased 2.4 percent on unit sales that were 0.8 percent lower. Parts and service and finance and insurance revenues grew 11.6 percent and 3.8 percent, respectively. Gross margin for the quarter was 16.0 percent compared with 16.5 percent during the year-ago period, primarily due to new vehicle sales growing more rapidly than higher-margin parts and service and finance and insurance businesses.
Income from operations was $32.7 million versus $31.4 million, a 4.2 percent increase. Operating margin was 2.8 percent compared with 3.0 percent during the year-ago period.
The company incurred an after-tax charge of $4.0 million, or $0.17 per diluted share, in association with the previously announced redemption of all of its 10 7/8% senior subordinated notes on March 1, 2004.
Net income decreased to $10.5 million from $14.8 million, and diluted average shares outstanding increased 1.6 percent to 23.4 million shares. Diluted earnings per share were $0.45, including the $0.17 negative impact from the notes redemption, compared with $0.64 a year ago.
Acquisition Update
In March 2004, the company completed the acquisition of a new Toyota franchise in Boston. This franchise became the third Toyota dealership for the Ira Motor Group and is expected to generate annual revenues of $55 million. The dealership will sell Scion vehicles in addition to Toyota.
Management's Outlook
Group 1 anticipates growth in the new vehicle, used vehicle, and parts and service markets during the second quarter, as there appear to be signs of a recovery in the used vehicle market, as well as an increase in manufacturers' incentives driving new vehicle sales. The company reaffirmed its FY2004 earnings guidance of $3.20 to $3.40 per diluted share excluding future acquisitions and the $0.17 per diluted share impact of the March 2004 notes redemption. This equates to $3.03 to $3.23 per diluted share excluding future acquisitions and including the redemption impact.
The company continues to seek strategic tuck-in acquisitions to augment its current markets, as well as platform acquisitions to enter new markets. Including the $315 million revenues acquired during the first quarter, the company is targeting to add dealerships with aggregate annual revenues of approximately $1 billion in 2004.
Hollingsworth stated, "Our acquisition pipeline continues to contain attractive, qualified candidates that fit our stringent criteria."
First-Quarter Conference Call
Group 1 will hold a conference call to discuss the first-quarter results at 10 a.m. EDT on Thursday, April 29, 2004. The call can be accessed live and will be available for replay over the Internet at www.vcall.com, or through Group 1's Web site, www.group1auto.com, for 30 days. In addition, an updated slide presentation will be available on Group 1's Web site.
About Group 1 Automotive, Inc.
Group 1 currently owns 83 automotive dealerships comprised of 123 franchises, 30 brands, and 30 collision service centers located in California, Colorado, Florida, Georgia, Louisiana, Massachusetts, New Jersey, New Mexico, Oklahoma and Texas. 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 www.group1auto.com
Group 1 Automotive, Inc.
Statements of Operations
(Unaudited) (Dollars in thousands, except per share amounts)
Three Months Ended
March 31,
-----------------------
2004 2003
----------- -----------
REVENUES:
New vehicle retail sales $675,977 $593,754
Used vehicle retail sales 230,655 225,198
Used vehicle wholesale sales 76,191 61,004
Parts & service sales 124,020 111,113
Retail finance fees 15,562 15,179
Vehicle service contract fees 15,546 15,198
Other F&I revenues, net 9,076 8,345
----------- -----------
Total revenues 1,147,027 1,029,791
COST OF SALES:
New vehicle retail sales 628,084 551,029
Used vehicle retail sales 202,085 197,058
Used vehicle wholesale sales 77,171 62,799
Parts & service sales 56,259 49,457
----------- -----------
Total cost of sales 963,599 860,343
Gross Profit 183,428 169,448
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 146,664 134,838
DEPRECIATION AND AMORTIZATION EXPENSE 4,088 3,250
----------- -----------
Income from operations 32,676 31,360
OTHER INCOME (EXPENSE):
Floorplan interest expense (4,639) (5,447)
Other interest expense, net (4,840) (2,369)
Loss on redemption of senior subordinated
notes (6,381) -
Other expense, net (24) (26)
----------- -----------
INCOME BEFORE INCOME TAXES 16,792 23,518
PROVISION FOR INCOME TAXES 6,305 8,702
----------- -----------
NET INCOME $10,487 $14,816
=========== ===========
Basic earnings per share $0.47 $0.66
Diluted earnings per share $0.45 $0.64
Weighted average shares outstanding:
Basic 22,523,499 22,363,602
Diluted 23,389,805 23,010,648
OTHER DATA:
Gross margin 16.0% 16.5%
Operating margin 2.8% 3.0%
Pretax income margin 1.5% 2.3%
Same store revenues 5.7% (7.8)%
Manufacturer floorplan assistance $6,699 $5,850
Retail new vehicles sold 24,432 22,177
Retail used vehicles sold 16,186 16,312
----------- -----------
Total retail sales 40,618 38,489
----------- -----------
Wholesale used vehicles sold 10,790 10,097
Group 1 Automotive, Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
March 31, December 31,
2004 2003
----------- ------------
(unaudited) (audited)
ASSETS:
Current assets:
Cash $32,315 $25,441
Contracts-in-transit and vehicle receivables 140,406 143,260
Inventories 766,937 671,279
Other assets 89,290 90,943
----------- ------------
Total current assets 1,028,948 930,923
----------- ------------
Property and equipment 144,163 131,647
Intangible assets 433,521 390,867
Investments and deferred costs from insurance
and vehicle service contract sales 27,214 28,263
Other assets 6,142 6,465
----------- ------------
Total assets $1,639,988 $1,488,165
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Floorplan notes payable $709,977 $493,568
Other interest-bearing liabilities 895 910
Accounts payable and accrued expenses 162,269 159,915
----------- ------------
Total current liabilities 873,141 654,393
----------- ------------
Debt 156,951 230,178
Other liabilities 45,442 44,730
----------- ------------
Total liabilities before deferred
revenues 1,075,534 929,301
----------- ------------
Deferred revenues 37,852 40,755
Stockholders' equity 526,602 518,109
----------- ------------
Total liabilities and stockholders'
equity $1,639,988 $1,488,165
=========== ============
OTHER DATA:
Working capital $155,807 $276,530
Current ratio 1.18 1.42
Long-term debt to capitalization 23% 31%
Last 12 months return on average equity 14% 16%
Group 1 Automotive, Inc.
First-Quarter Additional Information
(Unaudited)
NEW VEHICLE UNIT SALES GEOGRAPHIC MIX 1Q 2004 1Q 2003
---------------------------------------- ------------- -------------
Oklahoma 12.7% 13.0%
Houston 12.5 13.2
New England 12.5 12.3
California 12.1 12.2
Central Texas 7.7 7.7
New Orleans 7.2 6.5
West Texas 7.2 7.4
Florida 6.7 8.2
Dallas 6.1 5.9
Atlanta 5.7 6.0
Beaumont 3.0 3.3
New Mexico 3.0 3.1
New Jersey 2.4 -
Denver 1.2 1.2
------------- -------------
Total 100.0% 100.0%
NEW VEHICLE UNIT SALES BRAND MIX 1Q 2004 1Q 2003
---------------------------------------- ------------- -------------
Toyota/Lexus 26.9% 25.3%
Ford 22.7 26.5
DaimlerChrysler 13.2 11.6
Nissan/Infiniti 11.6 9.9
GM 10.6 9.6
Honda/Acura 10.3 10.8
Other 4.7 6.3
------------- -------------
Total 100.0% 100.0%
% from Luxury Brands 12.1% 11.2%
Car / Truck Mix 41.7% / 58.3% 43.0% / 57.0%
Domestic / Imports Mix 44.6% / 55.4% 46.2% / 53.8%
INDIVIDUAL PRODUCT DATA 1Q 2004 1Q 2003
---------------------------------------- ------------- -------------
New vehicle retail gross margin 7.1% 7.2%
New vehicle gross profit per retail unit $1,960 $1,927
Retail used vehicle gross margin 12.0% 11.7%
Used vehicle gross profit per retail
unit $1,705 $1,615
Parts & service gross margin 54.6% 55.5%
Finance & insurance revenues, net per
retail unit $989 $1,006
SAME STORE REVENUES 1Q 2004 1Q 2003
---------------------------------------- ------------- -------------
New vehicle retail sales 7.3% (10.3)%
Used vehicle retail sales (2.0)% (8.9)%
Used vehicle wholesale sales 19.9% 3.0%
Parts & service sales 6.9% 3.5%
Finance & insurance revenues, net (1.6)% (5.9)%
Total revenues 5.7% (7.8)%