Group 1 Posts Q1 Earnings
21 April 1998
Group 1 Posts 33% Gain in Net Income, EPS for First Quarter 1998
Momentum Generated in 1997 Continues
Highlights:
* Net income jumps 33% on 18% revenue growth
* EPS $0.20 vs. $0.15, a 33% increase
* Operating margin expands to 2.9% vs. 2.6%
* Retail vehicles sold 11,326 vs. 9,930, 14% increase
Summary Results of Operations (Unaudited)
(In thousands, except per share amounts)
Three Months Ended
March 31,
1998 1997*
Revenue $ 253,934 $ 215,382
Gross Profit $36,020 $31,044
Income from Operations $7,465 $5,570
Net Income $3,114 $2,337
Diluted Earnings per Share $0.20 $0.15
* These amounts represent pro forma results as the founding companies
were merged simultaneously with the company's initial public offering
on October 29, 1997.
HOUSTON, April 21 -- Group 1 Automotive, Inc. , a
leading operator and consolidator in the automotive retailing industry, today
reported strong gains in revenue, net income and earnings per share for the
first quarter of 1998. Revenue growth coupled with improved operating margins
drove the company's strong performance.
Revenues increased 18 percent to $253.9 million from $215.4 million for
the same period last year as a result of double-digit gains in all revenue
categories: new vehicle, used vehicle, parts and service and other dealership
revenue. Net income accelerated 33 percent, reaching $3.1 million, or $0.20
per share, compared with $2.3 million, or $0.15 per share, for the same period
last year. Earnings were driven higher by increased revenues and as a result
of operating margins expanding to 2.9 percent from 2.6 percent last year.
Expanded Margins, Synergy Produce Outstanding Results
"I am pleased to announce that the momentum Group 1 generated in 1997 has
continued into 1998," said B.B. Hollingsworth Jr., Group 1's chairman,
president and chief executive officer. "Our solid revenue growth, augmented
by margin expansion and realization of synergy, produced outstanding results."
Hollingsworth emphasized that the gains were achieved in core operations
and were only slightly enhanced by the closing of the Carroll Automotive Group
acquisition, effective March 1, 1998. Added Hollingsworth, "We experienced
strong brand performance in Toyota, Lexus and Chevrolet, and a strong
geographic performance in our Oklahoma City and Houston operations."
Additionally, Group 1 continued to realize cost savings which resulted in
a decrease in selling, general, and administrative expenses as a percentage of
revenue to 11.1 percent from 11.7 percent for the same period last year. "We
have implemented a new budgeting process, and our dealerships are being
benchmarked against plan and each other," Hollingsworth continued. "This has
resulted in operating managers taking a more pro-active and structured
approach to their businesses. Our performance this quarter shows solid
evidence that our budgeting and cost-reduction programs are adding value.
Furthermore, we began realizing the impact of our revenue-enhancement programs
during the quarter, as our new service contract and insurance programs were
implemented."
Acquisitions on Target
Further expansion of revenue and earnings, as well as geographic and brand
diversity, is targeted through acquisitions. During the first quarter, Group
1 announced that it had signed definitive agreements to acquire five
automobile dealerships. They include two new platforms in Albuquerque, N.M.,
and Denver, and two tuck-ins in Austin and South Florida. "With these
acquisitions, we will establish new positions in two great car and truck
markets, and expand our market position in two existing markets," commented
Hollingsworth.
On April 1, 1998, Group 1 announced that it had closed the acquisition of
three dealerships in Austin, Texas, significantly expanding its market
presence there. Once the Albuquerque and Denver acquisitions are closed,
Group 1's annualized revenue run rate will approximate $1.6 billion,
representing over 68,000 retail car and truck sales. "These acquisitions are
on target to close during the second quarter," Hollingsworth added. The
acquisitions are subject to customary closing conditions, including approval
of various manufacturers, government agencies and completion of due diligence.
Group 1 was founded to become a leading operator and consolidator in the
highly fragmented automotive retailing industry. Upon completion of all
previously announced acquisitions, Group 1 will own 58 dealership franchises
comprised of 24 different brands, and 12 collision service centers located in
Texas, Oklahoma, New Mexico, Colorado, Florida and Georgia. Through its
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
meaning 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
achievements 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 Form 10-K filed with the Securities and Exchange
Commission.
Group 1 Automotive, Inc.
Statements of Operations
(Unaudited)
(In thousands of dollars, except share amounts)
Three Months Ended
March 31
1998 1997*
REVENUES
New vehicle sales $138,022 $117,418
Used vehicle sales 87,119 73,217
Parts and service sales 21,568 19,030
Other dealership revenue, net 7,225 5,717
Total revenues 253,934 215,382
COST OF SALES 217,914 184,338
Gross profit 36,020 31,044
GOODWILL AMORTIZATION 243 200
SELLING, GENERAL
& ADMINISTRATIVE EXPENSES 28,312 25,274
Income from Operations 7,465 5,570
OTHER INCOME (EXPENSE):
Interest expense, net (2,136) (1,556)
Other income (expense), net (23) (21)
INCOME BEFORE INCOME TAXES 5,306 3,993
PROVISION FOR INCOME TAXES 2,192 1,656
NET INCOME $3,114 $2,337
Basic earnings per share $0.21 $0.16
Diluted earnings per share $0.20 $0.15
Weighted average shares
outstanding
Basic earnings
per share 15,197,670 14,673,051
Diluted earnings
per share 15,596,155 15,101,510
Other data:
Gross margin 14.2% 14.4%
Operating margin 2.9% 2.6%
Pretax income margin 2.1% 1.9%
Retail new vehicles sold 5,972 5,451
Retail used vehicles sold 5,354 4,479
Total retail sales 11,326 9,930
* These amounts represent pro forma results as the founding companies were
merged simultaneously with the company's initial public offering on October
29, 1997.
SOURCE Group 1 Automotive, Inc.