Auto Dealer UnitedAuto Reports Third Quarter 2005 Results
BLOOMFIELD HILLS, Mich.--Oct. 2, 20055, 2005--United Auto Group, Inc. , a worldwide automotive retailer, today reported a 10.8% increase in third quarter revenues to $2.8 billion. The revenue increase is driven by a 10.3% rise in retail vehicle revenues and a 14.3% growth in service and parts revenues, and includes a 7.0% increase in same-store retail sales. Gross margin in the third quarter increased 50 basis points to 14.7% due to margin increases in each of the Company's product lines, coupled with a 43-basis-point increase in the relative contribution of higher margin service and parts and finance and insurance revenues to total revenues.Third quarter net income was $32.8 million, or $0.70 per share. This represents a 19.0% increase compared to third quarter 2004 adjusted net income of $27.5 million, or $0.60 per share, which excludes $4.9 million ($0.10 per share) of net income resulting from the sale of an investment, a reduction of the Company's estimated annual effective tax rate, a refund of UK consumption taxes, and costs associated with the relocation of certain franchises in the UK.
For the nine months ended September 30, 2005, revenues increased 14.6% to $8.0 billion. Net income for the nine months was $88.9 million, or $1.89 per share. This represents a 16.0% increase compared to prior year adjusted net income of $76.6 million, or $1.69 per share, which excludes the $4.9 million of items referenced above and an additional $4.1 million from the sale of an investment in the second quarter of 2004.
"We are pleased with the performance of our business in the third quarter," said UAG Chairman Roger Penske. "During the quarter, we were challenged by higher interest rates, rising gasoline prices, product availability, and a shift in consumer buying patterns. Despite these obstacles, we achieved our 26th consecutive quarter of record revenue, including an 8.5% increase in same-store service and parts revenue, as well as improved gross margins in all areas of our operations."
Penske continued, "Our service and parts operation continues to improve, including increases in volume and margins, as a result of increases in units in operation and the continuing maturity of our capital investments. In fact, service and parts revenues increased to 10.3% of our total revenue, an improvement of 31 basis points over the prior year. The performance of our service and parts operations, coupled with strong margins on both new and used vehicles, contributed to an increase in our operating margin to 2.8%."
After considering the steady increase in interest rates, volatile energy prices and the challenging selling environment in the fourth quarter, the Company currently estimates earnings in the range of $0.51 to $0.56 per share for the fourth quarter and $2.40 to $2.45 per share for the full year 2005.
About UnitedAuto
United Auto Group, Inc., headquartered in Bloomfield Hills, Michigan, operates 269 retail automotive franchises, representing 40 different brands, and 29 collision repair centers. UnitedAuto, which sells new and previously owned vehicles, finance and insurance products and replacement parts, and offers maintenance and repair services on all brands it represents, has 167 franchises in 19 states and Puerto Rico and 102 franchises located internationally, primarily in the United Kingdom. UnitedAuto is a member of the Fortune 500 and Russell 2000 and has approximately 14,000 employees.
UNITED AUTO GROUP, INC.
Consolidated Statements of Income
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
Third Quarter
-----------------------
2005 2004
----------- -----------
New Vehicles $1,641,443 $1,475,564
Used Vehicles 577,209 536,063
Finance and Insurance 65,129 55,872
Service and Parts 287,357 251,416
Fleet 24,602 28,938
Wholesale 201,429 177,171
----------- -----------
Total Revenues 2,797,169 2,525,024
Cost of Sales 2,385,418 2,166,022
----------- -----------
Gross Profit 411,751 359,002
SG&A Expenses 323,021 277,811
Depreciation and Amortization 10,556 14,111
----------- -----------
Operating Income 78,174 67,080
Floor Plan Interest Expense (12,869) (11,538)
Other Interest Expense (12,349) (10,470)
Other Income -- 4,858
----------- -----------
Income from Continuing Operations Before
Minority Interests and Income Tax Provision 52,956 49,930
Minority Interests (486) (669)
Income Tax Provision (19,258) (17,154)
----------- -----------
Income from Continuing Operations 33,212 32,107
Income (Loss) from Discontinued Operations, Net
of Tax (448) 258
----------- -----------
Net Income $32,764 $32,365
=========== ===========
Income from Continuing Operations Per Diluted
Share $0.70 $0.69
=========== ===========
Diluted EPS $0.70 $0.70
=========== ===========
Diluted Weighted Average Shares Outstanding 47,124 46,567
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UNITED AUTO GROUP, INC.
Consolidated Statements of Income
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
Nine Months
-----------------------
2005 2004
----------- -----------
New Vehicles $4,633,416 $4,036,802
Used Vehicles 1,710,007 1,537,829
Finance and Insurance 182,468 155,352
Service and Parts 840,611 707,763
Fleet 79,260 75,245
Wholesale 587,337 498,221
----------- -----------
Total Revenues 8,033,099 7,011,212
Cost of Sales 6,837,055 5,994,385
----------- -----------
Gross Profit 1,196,044 1,016,827
SG&A Expenses 946,725 794,430
Depreciation and Amortization 31,233 30,893
----------- -----------
Operating Income 218,086 191,504
Floor Plan Interest Expense (40,350) (34,774)
Other Interest Expense (36,138) (31,287)
Other Income -- 11,469
----------- -----------
Income from Continuing Operations Before
Minority Interests and Income Tax Provision 141,598 136,912
Minority Interests (1,250) (1,491)
Income Tax Provision (51,965) (50,924)
----------- -----------
Income from Continuing Operations 88,383 84,497
Income from Discontinued Operations, Net of Tax 469 1,075
----------- -----------
Net Income $88,852 $85,572
=========== ===========
Income from Continuing Operations Per Diluted
Share $1.88 $1.87
=========== ===========
Diluted EPS $1.89 $1.89
=========== ===========
Diluted Weighted Average Shares Outstanding 47,005 45,198
=========== ===========
UNITED AUTO GROUP, INC.
Consolidated Condensed Balance Sheets
(Amounts in Thousands)
(Unaudited)
9/30/05 12/31/04
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Assets
Cash and Cash Equivalents $2,694 $15,187
Accounts Receivable, Net 379,922 356,625
Inventories 1,147,807 1,252,358
Other Current Assets 61,820 44,315
----------- -----------
Total Current Assets 1,592,243 1,668,485
Property and Equipment, Net 463,084 406,783
Intangibles 1,225,092 1,221,731
Other Assets 77,934 86,881
Assets of Discontinued Operations 65,333 148,921
----------- -----------
Total Assets $3,423,686 $3,532,801
=========== ===========
Liabilities and Stockholders' Equity
Floor Plan Notes Payable $1,015,268 $1,197,540
Accounts Payable and Accrued Expenses 437,847 402,232
Current Portion Long-Term Debt 3,556 11,367
----------- -----------
Total Current Liabilities 1,456,671 1,611,139
Long-Term Debt 620,434 574,970
Other Long-Term Liabilities 191,096 179,104
Liabilities of Discontinued Operations 30,588 92,553
----------- -----------
Total Liabilities 2,298,789 2,457,766
Stockholders' Equity 1,124,897 1,075,035
----------- -----------
Total Liabilities and Stockholders' Equity $3,423,686 $3,532,801
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UNITED AUTO GROUP, INC.
Selected Data
($ in thousands, except per transaction amounts)
Third Quarter Nine Months
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Units
New Retail Units 51,171 46,409 142,508 127,333
Used Retail Units 22,876 21,761 66,966 63,349
----------- ----------- ----------- -----------
Total Retail Units 74,047 68,170 209,474 190,682
=========== =========== =========== ===========
Same-Store Retail
Revenue
New Vehicles $1,520,874 $1,420,904 $4,067,849 $3,888,302
Used Vehicles 547,906 520,812 1,512,693 1,475,721
Finance and Insurance 61,919 53,993 168,967 151,597
Service and Parts 262,796 242,217 730,789 677,703
----------- ----------- ----------- -----------
Total Same-Store
Retail Revenue $2,393,495 $2,237,926 $6,480,298 $6,193,323
=========== =========== =========== ===========
Same-Store Retail
Revenue Growth
New Vehicles 7.0% 1.8% 4.6% 5.1%
Used Vehicles 5.2% 3.1% 2.5% 3.1%
Finance and Insurance 14.7% (3.1%) 11.5% (0.2%)
Service and Parts 8.5% 11.4% 7.8% 13.0%
Revenue Mix
New Vehicles 58.7% 58.4% 57.7% 57.6%
Used Vehicles 20.6% 21.2% 21.3% 21.9%
Finance and Insurance 2.3% 2.2% 2.3% 2.2%
Service and Parts 10.3% 10.0% 10.4% 10.1%
Fleet 0.9% 1.2% 1.0% 1.1%
Wholesale 7.2% 7.0% 7.3% 7.1%
Retail Gross Margin -
by Product
New Vehicles 8.5% 8.4% 8.6% 8.5%
Used Vehicles 9.1% 8.5% 9.2% 8.8%
Finance and Insurance 100.0% 100.0% 100.0% 100.0%
Service and Parts 54.2% 53.2% 54.3% 53.9%
Gross Profit per
Transaction
New Vehicles $2,724 $2,687 $2,805 $2,704
Used Vehicles 2,292 2,098 2,341 2,124
Finance and Insurance 880 820 871 815
UNITED AUTO GROUP, INC.
Selected Data (Continued)
Third Quarter Nine Months
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2005 2004 2005 2004
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Brand Mix:
Toyota/Lexus 21% 22% 21% 23%
BMW 15% 15% 14% 15%
Honda/Acura 15% 12% 14% 11%
Mercedes 9% 11% 10% 11%
Ford Premier Group 7% 8% 7% 9%
Audi 7% 6% 7% 4%
General Motors 7% 8% 7% 8%
Ford 3% 3% 3% 3%
Nissan/Infiniti 4% 4% 4% 4%
Chrysler 3% 4% 3% 4%
Porsche 3% 3% 4% 3%
Other 6% 4% 6% 5%
Debt to Total Capital Ratio 36% 40% 36% 40%
Rent Expense $29,274 $25,230 $86,999 $68,759