UnitedAuto Net Income Increases 28%; Revenues Increase 16%
BLOOMFIELD HILLS, Mich.--Oct. 2, 20048, 2004--United Auto Group, Inc. , a FORTUNE 500 automotive specialty retailer, today announced a 28.2% rise in third quarter net income on the strength of a 16.2% increase in revenue and continued strong same-store retail revenue growth of 3.7%. The same-store growth was highlighted by a 10.7% increase in service and parts revenue, driven by increases in units in operation and capacity increases at many locations, and a 3.0% increase in new vehicle retail revenue due primarily to increases at the Company's premium and luxury franchises.Revenue for the quarter increased to $2.7 billion and net income increased to $32.4 million, or $0.70 per share, from $25.3 million, or $0.61 per share, in the prior year. Third quarter 2004 results include a $3.1 million after tax gain ($0.07 per share) resulting from the sale of an investment, a $1.4 million benefit ($0.03 per share) from a reduction of the Company's estimated annual effective tax rate, and a $5.3 million after tax gain ($0.11 per share) resulting from a refund of UK consumption taxes. These gains were offset in part by $4.9 million of after tax non-cash charges ($0.11 per share) due primarily to the planned relocation of certain UK franchises as part of the Company's ongoing facility enhancement program. Earnings per share reflects an 11.8% increase in weighted average shares outstanding.
For the nine months ended September 30, 2004, revenues increased 17.4% to $7.5 billion. Net income for the nine months increased 36.1% to $85.6 million, or $1.89 per share, from $62.9 million, or $1.52 per share, in the prior year. Nine-month 2004 results include a $7.2 million after tax gain ($0.16 per share) resulting from the sale of an investment. Prior year results include the effect of $5.0 million of after tax non-recurring charges ($0.12 per share).
Commenting on third quarter results, Chairman Roger Penske said, "Our performance during a challenging third quarter showcases the strength of our business model and further validates our capital investment and international diversification strategies. Considering the impact on our operations from severe weather in Florida, Georgia and the Carolinas, a difficult selling environment for new and pre-owned vehicles, which I expect will continue in the fourth quarter, and the 75 basis point increase in interest rates since last year, our business performed exceptionally well."
After considering the challenging selling environment and increased interest rates, the Company currently estimates earnings in the range of $2.32 - $2.38 per share for 2004, which includes the $0.16 per share gain from the sale of an investment during the nine months ended September. Earnings per share in the fourth quarter are expected to be in the range of $0.43 - $0.49 per share. These estimates are based on an estimated average of 45.6 and 46.6 million shares outstanding for the year and the quarter, respectively, which represent increases of approximately 4.5 and 3.5 million shares, respectively, over the prior year periods.
UnitedAuto will host a conference call discussing financial results relating to third quarter 2004 on Thursday, October 28, 2004 at 2 p.m. ET. To listen to the conference call, participants must dial (800) 762-4887 (International, please dial (480) 629-9026). The call will also be simultaneously broadcast live over the Internet through the UnitedAuto website at www.unitedauto.com.
About UnitedAuto
UnitedAuto, which has pursued a strategy based on internal growth from its existing dealerships, as well as from strategic acquisitions, operates 145 franchises in the United States and 102 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.
UNITED AUTO GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)
Third Quarter
-----------------------
2004 2003
----------- -----------
New Vehicles $1,567,701 $1,388,131
Used Vehicles 566,394 488,035
Finance and Insurance 59,596 57,329
Service and Parts (a) 265,883 217,489
Fleet 39,102 25,102
Wholesale 189,313 137,910
----------- -----------
Total Revenues 2,687,989 2,313,996
Cost of Sales 2,308,273 1,981,820
----------- -----------
Gross Profit 379,716 332,176
SG&A Expenses 296,595 258,878
Depreciation and Amortization 14,686 8,106
----------- -----------
Operating Income 68,435 65,192
Floor Plan Interest Expense (12,261) (11,053)
Other Interest Expense (10,470) (11,114)
Other Income 4,858 --
----------- -----------
Income from Continuing Operations Before
Minority
Interests and Income Tax Provision 50,562 43,025
Minority Interests (676) (655)
Income Tax Provision (17,393) (16,995)
----------- -----------
Income from Continuing Operations 32,493 25,375
Loss from Discontinued Operations, Net of
Tax (128) (120)
----------- -----------
Net Income $32,365 $25,255
=========== ===========
Income from Continuing Operations Per Diluted
Share $0.70 $0.61
=========== ===========
Diluted EPS $0.70 $0.61
=========== ===========
Diluted Weighted Average Shares Outstanding 46,567 41,637
=========== ===========
(a): The Company's parts and service departments provide preparation
and reconditioning services for our dealerships' new and used
vehicle departments, for which the new and used vehicle
departments are charged as if they were third parties. The Company
has determined that revenue and cost of sales has not been reduced
by the intracompany charge for such work performed at certain of
the Company's dealerships. Commencing with the third quarter of
2004, the Company is reducing revenue and cost of sales for
intracompany charges at the identified dealerships and has revised
amounts previously reported to eliminate these intracompany
charges. Service and parts revenue and cost of sales have been
reduced by $18 million and $22 million for the three months ended
September 30, 2004 and 2003, respectively. The eliminations do not
have a material impact on service and parts revenue, gross profit,
operating income, income from continuing operations, net income,
earnings per share, cash flows, or financial position for any
period.
UNITED AUTO GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)
Nine Months
-----------------------
2004 2003
----------- -----------
New Vehicles $4,284,668 $3,745,448
Used Vehicles 1,623,136 1,386,581
Finance and Insurance 165,961 156,557
Service and Parts (a) 750,737 606,509
Fleet 106,007 87,523
Wholesale 534,266 376,661
----------- -----------
Total Revenues 7,464,775 6,359,279
Cost of Sales 6,388,234 5,439,118
----------- -----------
Gross Profit 1,076,541 920,161
SG&A Expenses 848,432 722,140
Depreciation and Amortization 32,609 22,644
----------- -----------
Operating Income 195,500 175,377
Floor Plan Interest Expense (36,766) (31,201)
Other Interest Expense (31,287) (32,206)
Other Income 11,469 --
----------- -----------
Income from Continuing Operations Before
Minority
Interests and Income Tax Provision 138,916 111,970
Minority Interests (1,504) (1,706)
Income Tax Provision (51,674) (44,231)
----------- -----------
Income from Continuing Operations 85,738 66,033
Loss from Discontinued Operations, Net of Tax (166) (123)
----------- -----------
Income Before Cumulative Effect of
Accounting Change 85,572 65,910
Cumulative Effect of Accounting Change -- (3,058)
----------- -----------
Net Income $85,572 $62,852
=========== ===========
Income from Continuing Operations Per Diluted
Share $1.90 $1.60
=========== ===========
Diluted EPS before Cumulative Effect of
Accounting Change $1.89 $1.60
=========== ===========
Cumulative Effect of Accounting Change on
Diluted EPS -- ($0.07)
=========== ===========
Diluted EPS $1.89 $1.52
=========== ===========
Diluted Weighted Average Shares Outstanding 45,198 41,258
=========== ===========
(a): The Company's parts and service departments provide preparation
and reconditioning services for our dealerships' new and used
vehicle departments, for which the new and used vehicle
departments are charged as if they were third parties. The Company
has determined that revenue and cost of sales has not been reduced
by the intracompany charge for such work performed at certain of
the Company's dealerships. Commencing with the third quarter of
2004, the Company is reducing revenue and cost of sales for
intracompany charges at the identified dealerships and has revised
amounts previously reported to eliminate these intracompany
charges. Service and parts revenue and cost of sales have been
reduced by $57 million and $63 million for the nine months ended
September 30, 2004 and 2003, respectively. The eliminations do not
have a material impact on service and parts revenue, gross profit,
operating income, income from continuing operations, net income,
earnings per share, cash flows, or financial position for any
period.
UNITED AUTO GROUP, INC.
Consolidated Condensed Balance Sheets
(Amounts In Thousands)
(Unaudited)
9/30/04 12/31/03
----------- -----------
Assets
Cash and Cash Equivalents $17,681 $13,439
Accounts Receivable, Net 388,689 342,446
Inventories 1,196,659 1,166,756
Other Current Assets 52,486 43,090
----------- -----------
Total Current Assets 1,655,515 1,565,731
Property and Equipment, Net 453,865 368,504
Intangibles 1,233,984 1,085,034
Other Assets 78,250 117,912
----------- -----------
Total Assets $3,421,614 $3,137,181
=========== ===========
Liabilities and Stockholders' Equity
Floor Plan Notes Payable $1,090,476 $1,122,065
Accounts Payable and Accrued Expenses 439,729 347,098
Current Portion Long-Term Debt 952 8,574
----------- -----------
Total Current Liabilities 1,531,157 1,477,737
Long-Term Debt 682,052 643,145
Other Long-Term Liabilities 177,124 187,887
----------- -----------
Total Liabilities 2,390,333 2,308,769
Stockholders' Equity 1,031,281 828,412
----------- -----------
Total Liabilities and Stockholders'
Equity $3,421,614 $3,137,181
=========== ===========
UNITED AUTO GROUP, INC.
Selected Data
Third Quarter Nine Months
----------------------- -----------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
Units
New Retail Units 50,099 47,486 137,360 128,791
Used Retail Units 23,788 23,055 69,077 66,563
----------- ----------- ----------- -----------
Total Retail
Units 73,887 70,541 206,437 195,354
=========== =========== =========== ===========
Same-Store Retail
Revenue
New Vehicles $1,406,929 $1,366,191 $3,810,260 $3,594,199
Used Vehicles 497,820 481,403 1,349,550 1,311,928
Finance and
Insurance 54,776 56,428 151,139 151,334
Service and Parts 237,323 214,300 653,697 581,035
----------- ----------- ----------- -----------
Total Same-
Store Retail
Revenue $2,196,848 $2,118,322 $5,964,646 $5,638,496
=========== =========== =========== ===========
Same-Store Retail
Revenue Growth
New Vehicles 3.0% 9.9% 6.0% 7.4%
Used Vehicles 3.4% 13.1% 2.9% 10.8%
Finance and
Insurance (2.9%) 17.2% (0.1%) 16.2%
Service and Parts 10.7% 11.7% 12.5% 9.3%
Revenue Mix
New Vehicles 58.3% 60.0% 57.4% 58.9%
Used Vehicles 21.1% 21.1% 21.7% 21.8%
Finance and
Insurance 2.2% 2.5% 2.2% 2.5%
Service and Parts 9.9% 9.4% 10.1% 9.5%
Fleet 1.5% 1.1% 1.4% 1.4%
Wholesale 7.0% 6.0% 7.2% 5.9%
Retail Gross Margin -
by Product
New Vehicles 8.4% 8.2% 8.5% 8.3%
Used Vehicles 8.7% 9.3% 8.9% 9.3%
Finance and
Insurance 100.0% 100.0% 100.0% 100.0%
Service and Parts 52.8% 52.9% 53.5% 53.0%
Gross Profit per
Transaction
New Vehicles $2,630 $2,383 $2,645 $2,422
Used Vehicles 2,061 1,962 2,091 1,932
Finance and
Insurance 807 813 804 801
UNITED AUTO GROUP, INC.
Selected Data (Continued)
Third Quarter Nine Months
----------------- -------------------
2004 2003 2004 2003
-------- -------- --------- ---------
Brand Mix:
Toyota/Lexus 21% 23% 22% 22%
BMW 14% 14% 15% 14%
Mercedes 10% 10% 10% 10%
Honda/Acura 12% 11% 11% 12%
General Motors 10% 10% 9% 11%
Ford Premier Group 7% 8% 8% 8%
Chrysler 5% 6% 5% 6%
Nissan/Infiniti 4% 5% 4% 5%
Ford 4% 4% 4% 5%
Other 13% 9% 12% 7%
Debt to Total Capital Ratio 40% 50% 40% 50%
Adjusted EBITDA (a) $75,716 $62,245 $202,810 $166,820
Rent Expense $27,150 $21,246 $74,432 $60,893
(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
-----------------
2004 2003 2004 2003
-------- -------- --------- -------
Income from continuing operations
before minority interests and
income tax
provision $ 50.6 $ 43.0 $ 138.9 $112.0
Other interest expense 10.5 11.1 31.3 32.2
Depreciation and amortization 14.7 8.1 32.6 22.6
-------- -------- --------- -------
Adjusted EBITDA $75.7 $62.2 $202.8 $166.8
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