UnitedAuto Reports Q2 1998 Results
23 July 1998
UnitedAuto Reports Second Quarter 1998 Results
NEW YORK--July 23, 1998--Company Reports Net Income of $8.2 Million, or
Earnings Per Share of $0.40, on Revenues of $894.4 Million
UnitedAuto Group, Inc. , the nation's second largest publicly-traded automotive retailer, today announced results for the quarter ended June 30, 1998.
Second quarter revenues increased 69.7% to $894.4 million versus $527.0 million in the comparable prior year period, reflecting the Company's acquisition activity, as well as its commitment to grow its new and pre-owned auto sales, service, financing and extended service contract businesses.
The Company reported net income in the second quarter of 1998 of $8.2 million, or earnings per share of $0.40 on a diluted basis. Net income was $7.6 million in the second quarter of 1997, or earnings per share of $0.42 on a diluted basis. Gross profit margin for the quarter was 12.6%.
Of the $894.4 million in second quarter dealership revenues, vehicle sales represented approximately 87.2%, or $779.6 million of the total; finance and insurance revenues represented approximately 3.5%, or $31.6 million of the total; and service and parts revenues of $83.2 million represented the remaining 9.3%.
The Company sold 21,045 new and 12,636 used vehicles during the second quarter of 1998 versus 13,006 new and 7,994 used vehicles for the comparable 1997 period.
Diluted weighted average shares outstanding were 20,406,000 for the second quarter of 1998 compared to 18,144,000 in 1997.
Marshall S. Cogan, Chairman and Chief Executive Officer, said "Our second quarter results reflect the deliberate focus we have taken to maximize profitability in each UnitedAuto store through the right mix of new and pre-owned vehicle sales, aftermarket product sales and service revenue. The steady improvement in our overall performance during the first half of 1998 versus the second half of 1997 reaffirms the efficacy of our auto retailing model and experience gained as the original architect of this new retailing strategy."
Mr. Cogan added, "We are pleased that our prudent approach to acquisitions, including the recent Classic and Young Group transactions and establishing a Memphis hub, has yielded favorable results."
Samuel X. DiFeo, President and Chief Operating Officer, said "The operating initiatives implemented during the first half, including MIS resources, contributed to the improved performance at the DiFeo and Landers operations. In addition, continued management and cost containment efforts in Atlanta have proved beneficial."
For the six months ended June 30, 1998, revenues were $1.6 billion as compared to $915.2 million in the comparable prior year period.
Net income for the first half of 1998 was $10.5 million, or earnings per share of $0.52 on a diluted basis, before an extraordinary after-tax item of $1.2 million for the write-off of debt issuance costs related to the Company's previous credit facility. The previous facility was terminated in connection with a new $75.0 million credit facility in the first quarter of 1998. Net income was $10.9 million for the first half of 1997, or earnings per share of $0.61. Weighted average shares outstanding were 20,134,000 in the first half of 1998 compared to 18,023,000 in the comparable prior year period.
Of the $1.6 billion in dealership revenues in the first half, vehicle sales represented approximately 87.0%, or $1.4 billion of the total; finance and insurance revenues represented approximately 3.4% or $54.4 million of the total; and service and parts revenues of $153.5 million represented the remaining 9.6%.
The Company said that it sold 36,944 new and 23,063 used vehicles during the first half of 1998 versus 22,757 new and 13,943 used vehicles for the comparable 1997 period.
The Company estimated the potential impact of the General Motors labor dispute, stating that that until inventories of General Motors brand vehicles are replenished at its dealerships the strike may have an impact on third quarter 1998 earnings in the range of $0.02 to $0.05 per month for August and September. UnitedAuto operates General Motors franchises at 12 of its 62 U.S. locations. These franchises also sell pre-owned vehicles and offer a complete range of services including service and parts, and the placement of financing and insurance.
UnitedAuto, which has pursued a strategy based on internal growth from its existing dealerships as well as from strategic acquisitions, operates franchises representing 30 brands in Arizona, Arkansas, California, Connecticut, Florida, Georgia, Illinois, Indiana, Louisiana, Nevada, New Jersey, New York, North Carolina, Puerto Rico, South Carolina, Tennessee, and Texas. UnitedAuto dealerships sell new and used vehicles and market a complete line of aftermarket automotive products and services through UnitedAuto Care, Inc. and UnitedAuto Care Products, Inc. The Company also owns UnitedAuto Finance Inc., a finance company engaged in the purchase, sale and servicing of primarily prime credit quality automobile loans.
This press release contains forward-looking information, and actual results may materially vary from those expressed or implied herein. Factors that could affect these results include those mentioned in the Company's Prospectus filed with the Securities and Exchange Commission on December 10, 1997.
Editors Note: UnitedAuto's logo and executive photos can be retrieved in digital form by media without charge from Wieck Photo Database (972) 392-0888.
UNITEDAUTO GROUP, INC.
Consolidated Statements of Operations (unaudited)
(Amounts in Thousands, except per share data)
Second Quarter (a)
------------------------
1998 1997
Auto Dealerships
Vehicle Sales $779,633 $463,381
Finance and Insurance 31,556 18,029
Service and Parts 83,167 45,548
------ ------
Total Revenues 894,356 526,958
Cost of Sales, Including Floor Plan Interest 781,794 458,308
------- -------
Gross Profit 112,562 68,650
Selling, General and Administrative Expenses 92,466 53,967
------ ------
Operating Income 20,096 14,683
Other Interest Expense (7,880) (1,777)
Other Income (c) 1,495 ---
----- ---
Income Before Income Taxes - Auto Dealerships 13,711 12,906
------ ------
UnitedAuto Finance
Revenues 2,915 1,100
Interest Expense (325) (116)
Operating and Other Expenses (2,330) (1,087)
------- -------
Income (Loss) Before Income Taxes -
Auto Finance 260 (103)
--- -----
Total Company
Income Before Minority Interests,
Income Tax Provision 13,971 12,803
and Extraordinary Item
Minority Interests (50) (61)
Income Tax Provision (5,728) (5,143)
------- -------
Income Before Extraordinary Item 8,193 7,599
Extraordinary Item, Net of Income Tax Benefit ---- ---
---- ---
Net Income $8,193 $7,599
=========== ===========
Diluted Income Per Share Before
Extraordinary Item $0.40 $0.42
=========== ===========
Diluted Income Per Share $0.40 $0.42
=========== ===========
Diluted Weighted Average Shares Outstanding 20,406 18,144
-------------------------------------------------------- -----------
EBITDA(b) $26,289 $17,050
(a) 1997 Amounts have been restated to reflect a change in the method
of accounting for new vehicle inventories from the LIFO method to
the Specific Identification Method.
(b) EBITDA is defined as income before minority interests, income tax
provision, interest expense (exclusive of interest expense
relating to floor plan notes payable), depreciation and
amortization.
(c) Represents fees received under management agreements at certain
dealerships for which acquisition is pending final manufacturer
approval.
UNITEDAUTO GROUP, INC.
Consolidated Statements of Operations (unaudited)
(Amounts in Thousands, except per share data)
First Half Comparative(a)
------------------------
1998 1997
Auto Dealerships
Vehicle Sales $1,396,607 $804,214
Finance and Insurance 54,437 31,512
Service and Parts 153,513 79,432
------- ------
Total Revenues 1,604,557 915,158
Cost of Sales, Including Floor Plan Interest 1,402,771 798,896
--------- -------
Gross Profit 201,786 116,262
Selling, General and Administrative Expenses 171,007 95,723
------- ------
Operating Income 30,779 20,539
Other Interest Expense (14,974) (2,246)
Other Income (c) 1,848 297
----- ---
Income Before Income Taxes - Auto Dealerships 17,653 18,590
------ ------
UnitedAuto Finance
Revenues 5,096 2,085
Interest Expense (420) (260)
Operating and Other Expenses (4,403) (2,024)
------- -------
Income (Loss) Before Income Taxes -
Auto Finance 273 (199)
--- -----
Total Company
Income Before Minority Interests,
Income Tax Provision 17,926 18,391
and Extraordinary Item
Minority Interests (84) (97)
Income Tax Provision (7,350) (7,378)
------- -------
Income Before Extraordinary Item 10,492 10,916
Extraordinary Item, Net of Income Tax Benefit (1,235) ---
------- ---
Net Income $9,257 $10,916
=========== ===========
Diluted Income Per Share Before
Extraordinary Item $0.52 $0.61
=========== ===========
Diluted Income Per Share $0.46 $0.61
=========== ===========
Diluted Weighted Average Shares Outstanding 20,134 18,023
-------------------------------------------------------- -----------
EBITDA(b) $41,081 $24,996
(a) 1997 Amounts have been restated to reflect a change in the method
of accounting for new vehicle inventories from the LIFO method to
the Specific Identification Method.
(b) EBITDA is defined as income before minority interests, income tax
provision, interest expense (exclusive of interest expense
relating to floor plan notes payable), and depreciation and
amortization.
(c) 1998 amount represents fees received under management agreements
at certain dealerships for which acquisition is pending final
manufacturer approval.