Group 1 Fourth-Quarter Revenues, Net Income More Than Double
3 February 1999
Group 1 Fourth-Quarter Revenues, Net Income More Than Double; 1998 Revenues Up 81%, Net Income 82%
Highlights:
-- Q4 diluted EPS up 93% to $0.29 on gains in revenues, net income
-- Q4 gross and operating margins accelerate significantly
-- 1998 diluted EPS $1.16, a 53% increase
-- Recently announced acquisitions to boost revenue run rate to z
$2.2 billion
Summary Results of Operations (Unaudited)
(In millions, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
1998 1997 1998 1997
Revenues $472.5 $213.2 $1,630.1 $902.3
Gross profit $69.2 $29.5 $236.5 $127.1
Income from operations $14.4 $5.3 $52.0 $25.4
Net income $5.5 $2.3 $20.7 $11.4
Diluted earnings per share $0.29 $0.15 $1.16 $0.76
HOUSTON, Feb. 3 -- Group 1 Automotive, Inc. , a
leading operator and consolidator in the automotive retailing industry, today
reported significant gains in revenues and net income for the fourth quarter
and for the year ended December 31, 1998. Revenue growth across all
dealership offerings, coupled with improved operating margins and
contributions from acquisitions, drove the company's strong performance.
Strong Results for Core and Acquired Dealerships
For the fourth quarter ended December 31, 1998, revenues accelerated to
$472.5 million from $213.2 million for the same period last year. Net income
increased to $5.5 million from $2.3 million while earnings per diluted share
grew to $0.29 from $0.15 a year ago.
Gross margin expanded to 14.6 percent from 13.8 percent during the
year-ago period due to an increase in new vehicle gross margin and a shift in
the merchandising mix, as parts and service and other dealership revenue
increased more rapidly than lower-margin revenues. Income from operations
rose sharply to $14.4 million from $5.3 million, resulting in the operating
margin expanding to 3.0 percent from 2.5 percent in the year-ago period.
According to B.B. Hollingsworth Jr., Group 1's chairman, president and
chief executive officer, revenue gains were attributed to strong internal
growth as well as contributions from acquisitions. Sales were especially
strong at the company's Oklahoma and Houston platforms. The significant gain
in other dealership revenue, which includes high-margin vehicle service,
finance and insurance contracts, was attributed to new training programs and
enhanced economics.
"One of the key elements of our long-term growth strategy is to increase
revenues from our high-margin products," Hollingsworth said. "We will
continue to provide our co-workers with the skills and products necessary to
generate revenues that boost gross margins, and ultimately, shareholder
value."
Smooth Integration of Acquisitions Drives 1998 Results
For the year, revenues accelerated to $1.6 billion from $902.3 million in
1997. Net income increased to $20.7 million, or $1.16 per diluted share,
compared with $11.4 million, or $0.76 per diluted share.
Gross margin for 1998 was 14.5 percent compared with 14.1 percent a year
ago. Income from operations more than doubled, rising to $52.0 million from
$25.4 million. The operating margin expanded to 3.2 percent from 2.8 percent
in 1997.
"We are very proud of our achievements and are confident in our abilities
to continue to execute our business plan," Hollingsworth said. "Our operating
leverage has been significant and demonstrates that we have been successful in
integrating both our platform and tuck-in acquisitions. We have proven that
select acquisitions executed under a disciplined strategy can produce earnings
growth and enhance shareholder value."
Recently Announced Acquisitions Enhance Brand, Geographic Diversity
Group 1 recently announced that it had agreed to acquire 16 dealership
franchises in seven markets. Upon completion, the company's annualized
revenue run rate will increase to over $2.2 billion, representing 92,000
retail car and truck sales.
Hollingsworth confirmed that the company would continue to seek
acquisitions that enhance brand and geographic diversity, as well as provide
synergy and add value.
Group 1 is a leading operator and consolidator in the highly fragmented
automotive retailing industry. Upon completion of all announced acquisitions,
Group 1 will own 71 dealership franchises comprised of 23 different brands,
and 16 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 vehicle
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 are subject to known and unknown risks, uncertainties or other factors
not under Group 1's control that may cause the actual results, performance or
achievements of Group 1 to be materially different from the results,
performance or other expectations implied by these forward-looking statements.
Some of these risks, uncertainties and other factors include those disclosed
in Group 1's filings with the Securities and Exchange Commission.
Group 1 Automotive, Inc. can be reached on the Internet at
http://www.group1auto.com
Group 1 Automotive, Inc.
Statements of Operations
(Unaudited)
(In thousands of dollars, except share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
1998 1997 1998 1997
REVENUES:
New vehicle sales $268,883 $121,936 $931,205 $513,864
Used vehicle sales 147,097 67,275 510,192 288,010
Parts & service sales 41,879 18,827 139,144 77,215
Other dealership
revenue, net 14,683 5,207 49,516 23,206
Total revenues 472,542 213,245 1,630,057 902,295
COST OF SALES 403,369 183,714 1,393,547 775,164
Gross Profit 69,173 29,531 236,510 127,131
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 52,756 23,475 178,038 98,967
DEPRECIATION AND
AMORTIZATION 2,051 708 6,426 2,752
Income from operations 14,366 5,348 52,046 25,412
OTHER INCOME (EXPENSE):
Floorplan interest
expense (3,842) (1,267) (12,837) (5,194)
Other interest expense,
net (1,322) (242) (4,027) (926)
Other income, net 46 106 39 88
INCOME BEFORE INCOME
TAXES 9,248 3,945 35,221 19,380
PROVISION FOR INCOME
TAXES 3,779 1,634 14,502 7,967
NET INCOME $5,469 $2,311 $20,719 $11,413
Basic earnings per share $0.30 $0.16 $1.20 $0.78
Diluted earnings per share $0.29 $0.15 $1.16 $0.76
Weighted average shares
outstanding:
Basic 18,242,118 14,672,073 17,281,165 14,672,804
Diluted 18,992,225 15,089,327 17,904,878 15,098,594
Other Data:
Gross margin 14.6% 13.8% 14.5% 14.1%
Operating margin 3.0% 2.5% 3.2% 2.8%
Pretax income margin 2.0% 1.8% 2.2% 2.1%
Retail new vehicles sold 11,182 5,278 39,822 23,201
Retail used vehicles sold 8,817 4,207 31,248 18,130
Total retail sales 19,999 9,485 71,070 41,331
GROUP 1 AUTOMOTIVE, INC.
Condensed Consolidated Balance Sheets
(In thousands)
December 31, December 31,
1998 1997
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $66,443 $35,092
Inventories 219,176 105,421
Other assets 41,303 21,169
Total current assets 326,922 161,682
Property and equipment, net 21,960 21,586
Goodwill, net 123,587 27,078
Other assets 5,241 2,803
Total assets $477,710 $213,149
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Floorplan notes payable $193,405 $58,488
Other liabilities 85,266 47,720
Total current liabilities 278,671 106,208
Debt, net of current maturities 42,821 7,053
Other liabilities 20,034 10,516
Total stockholders' equity 136,184 89,372
Total liabilities and
stockholders' equity $477,710 $213,149