UnitedAuto Reports Fourth Quarter Results
BLOOMFIELD HILLS, Mich.--Feb. 14, 2006--United Auto Group, Inc. :-- Income From Continuing Operations Increases 13% to $31.6 Million
-- Income From Continuing Operations Rises 12% to $0.67 per share
-- Total Revenues Increase 7%
-- Same-Store Retail Revenues Increase 4%
United Auto Group, Inc. , an international automotive retailer, today reported fourth quarter income from continuing operations of $31.6 million and related earnings per share of $0.67, representing increases of 12.9% and 11.7%, respectively, over the comparable period in 2004. Fourth quarter 2005 results include $5.2 million of after-tax earnings ($0.11 per share) attributable to the sale of all the remaining variable profits relating to the pool of extended service contracts sold at the Company's dealerships over the past five years. Fourth quarter net income amounted to $30.1 million and related earnings per share was $0.64, representing increases of 15.3% and 14.3%, respectively.
Revenues in the fourth quarter increased 7.5% to $2.5 billion, including a 3.9% increase in same-store retail revenues, and gross margin improved to 15.7%, including increases in margins of new vehicle, used vehicle and service and parts revenues. The increase in same-store revenue was highlighted by 9.0% growth in service and parts revenues at the Company's dealerships in the U.S. and a 7.5% increase in same-store retail revenues at the Company's dealerships located outside the U.S.
For the year ended December 31, 2005, revenues increased 13.9% to $10.2 billion. Full year income from continuing operations amounted to $120.7 million and related earnings per share was $2.57, representing increases of 8.2% and 4.9%, respectively, over 2004. Results for 2005 include the earnings from the sale of the extended service contract variable profits, as well as the after-tax severance charges of $1.2 million ($0.03 per share) recorded in the second quarter. Full year 2004 results include $7.2 million ($0.16 per share) of after-tax earnings resulting from the sale of an investment. Adjusted for these items, income from continuing operations and related earnings per share amounted to $116.7 million and $2.49 per share, representing increases of 11.8% and 8.7%, respectively, over the comparable period in 2004.
Commenting on the Company's results, Chairman Roger Penske said, "We continue to be pleased with the performance of our business, despite the challenging retail environment during most of the quarter. We believe our strategies, including the strength of our brand mix, our geographical diversity, and our commitment to increasing the service and parts component of UAG's business, remain key differentiators of our Company and an integral part of the Company's success."
Penske continued, "2005 was another outstanding year for UnitedAuto. We strengthened our brand mix, added new franchises in important growth markets, and increased our gross margin by 29 basis points to 15.2%. In addition, our recently completed $375 million convertible note offering lowers our overall cost of capital, fixes the interest rate on a significant portion of our debt in a time of rising interest rates, and leaves us with significant financial flexibility to pursue our growth objectives."
After considering volatile energy prices, the challenging selling environment and the impact of our recent convertible note offering, the Company currently estimates earnings from continuing operations to be in the range of $2.70 to $2.80 per share for the year ended December 31, 2006, and in the range of $0.53 to $0.57 per share for the first quarter 2006. These estimates are based on an estimated average of 47.0 million shares outstanding.
About UnitedAuto
United Auto Group, Inc., headquartered in Bloomfield Hills, Michigan, operates 297 retail automotive franchises, representing 40 different brands, and 27 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 171 franchises in 19 states and Puerto Rico and 126 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)
Fourth Quarter
-----------------------
2005 2004
----------- -----------
Revenues:
New Vehicle $1,418,442 $1,336,355
Used Vehicle 500,733 470,054
Finance and Insurance, Net 61,501 61,972
Service and Parts 279,043 249,611
Fleet and Wholesale Vehicle 197,518 168,483
----------- -----------
Total Revenues 2,457,237 2,286,475
Cost of Sales:
New Vehicle 1,291,419 1,218,484
Used Vehicle 457,312 430,911
Service and Parts 125,210 113,612
Fleet and Wholesale Vehicle 198,700 168,612
----------- -----------
Total Cost of Sales 2,072,641 1,931,619
----------- -----------
Gross Profit 384,596 354,856
SG&A Expenses 298,012 277,228
Depreciation and Amortization 10,148 8,786
----------- -----------
Operating Income 76,436 68,842
Floor Plan Interest Expense (13,447) (11,671)
Other Interest Expense (13,402) (11,686)
----------- -----------
Income from Continuing Operations Before
Minority Interests and Income Taxes 49,587 45,485
Minority Interests (564) (556)
Income Taxes (17,410) (16,924)
----------- -----------
Income from Continuing Operations 31,613 28,005
Loss from Discontinued Operations, Net of Tax (1,492) (1,890)
----------- -----------
Net Income $30,121 $26,115
=========== ===========
Income from Continuing Operations Per Diluted
Share $0.67 $0.60
=========== ===========
Diluted EPS $0.64 $0.56
=========== ===========
Diluted Weighted Average Shares Outstanding 47,187 46,689
=========== ===========
UNITED AUTO GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)
Twelve Months
-----------------------
2005 2004
----------- -----------
Revenues:
New Vehicle $5,900,326 $5,195,728
Used Vehicle 2,148,582 1,929,230
Finance and Insurance, Net 237,843 209,467
Service and Parts 1,100,241 938,090
Fleet and Wholesale Vehicle 803,292 675,983
----------- -----------
Total Revenues 10,190,284 8,948,498
Cost of Sales:
New Vehicle 5,384,406 4,746,894
Used Vehicle 1,956,066 1,764,080
Service and Parts 500,316 431,805
Fleet and Wholesale Vehicle 804,152 674,856
----------- -----------
Cost of Sales 8,644,940 7,617,635
----------- -----------
Gross Profit 1,545,344 1,330,863
SG&A Expenses 1,213,259 1,036,521
Depreciation and Amortization 39,388 37,910
----------- -----------
Operating Income 292,697 256,432
Floor Plan Interest Expense (50,922) (44,033)
Other Interest Expense (49,540) (42,969)
Other Income -- 11,469
----------- -----------
Income from Continuing Operations Before
Minority Interests and Income Taxes 192,235 180,899
Minority Interests (1,814) (2,047)
Income Taxes (69,760) (67,290)
----------- -----------
Income from Continuing Operations 120,661 111,562
Income (Loss) from Discontinued Operations, Net
of Tax (1,688) 125
----------- -----------
Net Income $118,973 $111,687
=========== ===========
Income from Continuing Operations Per Diluted
Share $2.57 $2.45
=========== ===========
Diluted EPS $2.53 $2.45
=========== ===========
Diluted Weighted Average Shares Outstanding 46,966 45,613
=========== ===========
UNITED AUTO GROUP, INC.
Consolidated Condensed Balance Sheets
(Amounts In Thousands)
(Unaudited)
12/31/05 12/31/04
----------- -----------
Assets
Cash and Cash Equivalents $9,424 $23,547
Accounts Receivable, Net 412,861 342,174
Inventories 1,224,443 1,180,769
Other Current Assets 51,142 43,095
Assets of Discontinued Operations 181,775 284,614
----------- -----------
Total Current Assets 1,879,645 1,874,199
Property and Equipment, Net 424,429 374,678
Intangibles 1,206,471 1,197,044
Other Assets 83,628 86,880
----------- -----------
Total Assets $3,594,173 $3,532,801
=========== ===========
Liabilities and Stockholders' Equity
Floor Plan Notes Payable $845,251 $807,204
Floor Plan Notes Payable - Non-Trade 331,953 315,634
Accounts Payable and Accrued Expenses 386,739 395,750
Current Portion Long-Term Debt 3,551 11,367
Liabilities of Discontinued Operations 97,256 173,774
----------- -----------
Total Current Liabilities 1,664,750 1,703,729
Long-Term Debt 576,690 574,933
Other Long-Term Liabilities 207,001 179,104
----------- -----------
Total Liabilities 2,448,441 2,457,766
Stockholders' Equity 1,145,732 1,075,035
----------- -----------
Total Liabilities and Stockholders'
Equity $3,594,173 $3,532,801
=========== ===========
UNITED AUTO GROUP, INC.
Selected Data
Fourth Quarter Twelve Months
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Units
New Retail Units 40,864 40,056 178,157 161,221
Used Retail Units 18,407 18,161 81,437 76,308
----------- ----------- ----------- -----------
Total Retail Units 59,271 58,217 259,594 237,529
=========== =========== =========== ===========
Same-Store Retail
Revenue
New Vehicles $1,372,707 $1,327,553 $5,157,216 $4,908,989
Used Vehicles 486,823 463,945 1,891,521 1,817,051
Finance and
Insurance, Net 60,112 61,674 220,221 201,689
Service and Parts 263,286 247,418 948,862 881,982
----------- ----------- ----------- -----------
Total Same-Store
Retail Revenue $2,182,928 $2,100,590 $8,217,820 $7,809,711
=========== =========== =========== ===========
Same-Store Retail
Revenue Growth
New Vehicles 3.4% 6.7% 5.1% 6.1%
Used Vehicles 4.9% 7.8% 4.1% 5.8%
Finance and
Insurance, Net (2.5%) 37.6% 9.2% 10.2%
Service and Parts 6.4% 12.7% 7.6% 13.3%
Revenue Mix
New Vehicles 57.7% 58.4% 57.9% 58.1%
Used Vehicles 20.4% 20.6% 21.1% 21.6%
Finance and
Insurance, Net 2.5% 2.7% 2.3% 2.3%
Service and Parts 11.4% 10.9% 10.8% 10.5%
Fleet and Wholesale 8.0% 7.4% 7.9% 7.5%
Retail Gross Margin -
by Product
New Vehicles 9.0% 8.8% 8.7% 8.6%
Used Vehicles 8.7% 8.3% 9.0% 8.6%
Service and Parts 55.1% 54.5% 54.5% 54.0%
Gross Profit per
Transaction
New Vehicles $3,108 $2,943 $2,896 $2,784
Used Vehicles 2,359 2,155 2,364 2,164
Finance and
Insurance 1,038 1,064 916 882
UNITED AUTO GROUP, INC.
Selected Data (Continued)
Fourth Quarter Twelve Months
----------------- ------------------
2005 2004 2005 2004
-------- -------- --------- --------
Brand Mix:
Toyota/Lexus 21% 23% 22% 24%
BMW 16% 15% 15% 16%
Honda/Acura 15% 14% 15% 12%
DCX 12% 13% 12% 14%
Ford 9% 9% 9% 10%
Audi 7% 6% 7% 5%
General Motors 5% 6% 6% 7%
Porsche 4% 4% 4% 3%
Nissan/Infiniti 3% 4% 4% 4%
Other 8% 6% 6% 5%
Total Brand Mix:
Domestic 9% 9% 10% 10%
Foreign (incl. Premium / Luxury) 91% 91% 90% 90%
Premium / Luxury 61% 59% 58% 57%
Debt to Total Capital Ratio 34% 35% 34% 35%
Rent Expense $30,950 $24,701 $115,550 $91,214