Group 1 Posts 21% Net Income, EPS Increase for 1997
17 February 1998
Group 1 Posts 21% Net Income, EPS Increase for 1997
Fourth-Quarter 1997 Net Income, EPS Accelerate
Highlights:
- 1997 net income jumps 21% on 10% revenue gain
- 1997 EPS $0.76 vs. $0.63 in 1996, a 21% increase
- Q4 net income, EPS show strong gains
Summary Results of Operations (Unaudited Pro Forma)
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
1997 1996 1997 1996
Revenues $213,245 $197,963 $902,295 $821,913
Gross profit $29,531 $27,975 $127,131 $116,130
Operating income $5,348 $3,212 $25,412 $21,822
Net income $2,311 $1,073 $11,413 $9,447
Diluted earnings per
share $0.15 $0.07 $0.76 $0.63
HOUSTON, Feb. 17 -- Group 1 Automotive, Inc. , a
leading operator and consolidator in the automotive retailing industry, today
reported strong gains in revenues, net income and earnings per share for the
fourth quarter and year ended December 31, 1997. Revenue growth in new and
used vehicle sales and other dealership revenue coupled with improved
operating margins, drove the company's strong performance.
Group 1 was founded in October 1997 through a combination of 30 automobile
dealer franchises and a simultaneous initial public offering. All financial
results are reported on a pro forma basis, assuming that the combination
occurred at the beginning of the periods presented.
For the year, revenues grew 10 percent to $902.3 million from
$821.9 million for 1996. The revenue expansion resulted from both dollar and
volume increases in new and used vehicle sales. Group 1's Toyota, Lexus and
Honda dealerships were the top performers in new vehicle sales.
Gross profit and operating margin improvements pushed net income for 1997
up 21 percent to $11.4 million, or $0.76 per share on a diluted basis,
compared with $9.4 million, or $0.63 per share on a diluted basis last year.
For the fourth quarter, revenues increased 8 percent to $213.2 million
from $198.0 million a year ago, as a result of gains in new and used vehicle
sales. Net income accelerated, reaching $2.3 million, or $0.15 per share on a
diluted basis, compared with $1.1 million, or $0.07 per share on a diluted
basis last year.
Success Results from Revenue Growth, Cost Efficiencies
"We're extremely pleased with our performance," said Group 1 Chairman,
President and Chief Executive Officer B.B. Hollingsworth Jr. "Our strong
revenue growth, combined with our commitment to identify and initiate
cost-reduction and revenue-enhancement strategies, produced solid revenue and
earnings."
Hollingsworth emphasized that the revenue gains were achieved solely
through the company's core operations, defined as the four dealership groups
combined at the time of the IPO.
Added Hollingsworth, "We are also very proud of how quickly management has
identified savings in our core operations." He noted, for example, that
savings on risk management -- property, casualty and liability insurance --
alone are in the range of 25 percent annually. "We are committed to expense
control and will continue to focus on leveraging our purchasing power."
In December 1997, Group 1 closed a three-year, $125 million revolving
credit facility. According to Hollingsworth, the completion of this facility
was important to the company since "it provides an alternative source of
financing and will reduce our cost of funds. This is another example of the
synergy that we can derive from consolidation."
Acquisitions
Additional expansion of revenue and earnings, as well as geographic and
brand diversity, is targeted through acquisitions, the company said. In
December 1997, Group 1 announced that it had signed definitive agreements to
acquire four automotive dealership groups, representing 19 dealership
franchises in five markets. "We anticipate closing all of the transactions
during this first quarter," Hollingsworth said. "Once these transactions are
completed, we'll be one of the top 10 dealership groups in the United States
with an annual revenue run rate of about $1.3 billion.
"The acquisition opportunities are numerous," Hollingsworth continued.
"That allows us to be very selective. We will seek large, well-run
dealerships with committed management that provide geographic diversity, and
smaller dealerships in our existing markets that improve our brand diversity
and facilitate operating efficiencies."
Group 1 was founded to become a leading operator and consolidator in the
highly fragmented automotive retailing industry and completed its initial
public offering in October 1997. Following the completion of the pending
acquisitions, which are subject to approval by various manufacturers, Group 1
will be one of the top 10 dealership groups in the United States, owning 48
dealership franchises comprised of 24 different brands located in Texas,
Oklahoma, Florida and Georgia. Through these dealerships, the company sells
new and used cars and light trucks, provides maintenance and repair services,
sells replacement parts and arranges related financing, insurance and service
contracts.
This press release contains certain forward-looking statements within the
meanings of the Securities Act of 1933 and the Securities Exchange Act of
1934, which involve known and unknown risks, uncertainties or other factors
not under the company's control which may cause the actual results,
performance or achievement of the company to be materially different from the
results, performance or other expectations implied by these forward-looking
statements. Some of these risks and factors include, but are not limited to,
those disclosed in the company's October 29, 1997, Prospectus filed with the
Securities and Exchange Commission.
Group 1 Automotive, Inc.
Unaudited Pro Forma Combined Statements of Operations
(In thousands of dollars, except share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
1997 1996 1997 1996
REVENUES
New vehicle sales $121,936 $114,381 $513,864 $469,318
Used vehicle sales 67,275 60,179 288,010 258,027
Parts & service sales 18,827 18,722 77,215 73,451
Other dealership revenue,
net 5,207 4,681 23,206 21,117
Total revenues 213,245 197,963 902,295 821,913
COST OF SALES (A) 183,714 169,988 775,164 705,783
Gross profit 29,531 27,975 127,131 116,130
GOODWILL AMORTIZATION 192 200 791 798
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 23,991 24,563 100,928 93,510
Income from operations 5,348 3,212 25,412 21,822
OTHER INCOME (EXPENSE):
Interest expense, net (A) (1,509) (1,437) (6,120) (5,861)
Other income, net 106 129 88 175
INCOME BEFORE INCOME TAXES 3,945 1,904 19,380 16,136
PROVISION FOR INCOME TAXES 1,634 831 7,967 6,689
NET INCOME $2,311 $1,073 $11,413 $9,447
Basic earnings per share $0.16 $0.07 $0.78 $0.64
Diluted earnings per share $0.15 $0.07 $0.76 $0.63
Weighted average shares
outstanding
Basic earnings per
share 14,672,073 14,673,051 14,672,804 14,673,051
Diluted earnings per
share 15,089,327 15,101,510 15,098,594 15,101,510
Other data:
Gross margin 13.8% 14.1% 14.1% 14.1%
Operating margin 2.5% 1.6% 2.8% 2.7%
Pretax income margin 1.8% 1.0% 2.1% 2.0%
Retail new vehicles sold 5,278 5,149 23,201 21,378
Retail used vehicles sold 4,207 4,006 18,130 17,220
(A) Interest assistance from suppliers has been classified as a decrease
in cost of sales in each period presented. In prior reports, such credits
were recorded as a reduction in interest expense.
SOURCE Group 1 Automotive, Inc.