UnitedAuto Reports Results for First Quarter 1999
22 April 1999
UnitedAuto Reports Results for First Quarter 1999
NEW YORK--April 22, 1999--$3.7 Million, or Earnings Per Diluted Share of $0.16, on
Revenues of $904.7 Million
Same-store Dealership Retail Gross Profit Increases 13.3% Versus
the Prior Year
UnitedAuto Group, Inc. , the nation's second largest publicly traded automotive retailer, today announced results for the quarter ended March 31, 1999.
First quarter revenues increased 27.1% to $904.7 million versus $711.7 million in the comparable prior year period. Of the $904.7 million in first quarter dealership revenues, vehicle sales represented approximately 85.7%, or $775.3 million of the total; finance and insurance revenues represented approximately 4.1%, or $36.7 million of the total; and service and parts revenues of $92.7 million represented the remaining 10.2%.
Gross profit margin for the quarter was 13.1% compared to 12.5% in the comparable prior year period.
The Company sold 20,240 new and 12,569 used vehicles during the first quarter of 1999 versus 15,899 new and 10,427 used vehicles for the comparable 1998 period.
Samuel X. DiFeo, President and Chief Operating Officer, said, "We are pleased with our operational progress in the first quarter. For the first quarter, same-store dealership gross profit, which includes retail sales and service gross, increased 13.3 % versus the prior year for dealerships owned for the entire first quarter of 1998. Same-store total retail revenue, which increased by 10.7% for the same period, showed similar positive momentum."
Diluted weighted average shares outstanding were 23,307,000 for the first quarter of 1999 compared to 19,924,000 in 1998. The 1999 weighted average share calculation includes the dilutive effect of 1,156,689 shares issued in February 1999 under the minimum share price guarantee relating to the 1,040,039 shares of common stock issued in connection with the acquisition of the Young Automotive Group during 1998. The shares issued in February 1999 were in settlement of the stock price guarantee obligation with respect to 444,987 shares of common stock. The Company noted that under the terms of the Young agreement, it has the option to complete the transaction with either cash or common stock. The 1999 weighted average also includes 1,398,219 shares of common stock (as if the settlement were in common stock) estimated to be issued in June 1999 in settlement of the stock price guarantee obligation on the remaining 595,052 shares of common stock. The estimated dilutive effect of the June 1999 settlement was based upon the Company's common stock price of $7.75 at March 31, 1999. Should the Company elect to settle the June obligation in stock, the dilutive effect on earnings per share will be based upon the actual market value of the Company's common stock at the time of settlement.
As a result of pre-tax charges totaling $33.3 million recorded in the fourth quarter of 1998 and the more stringent first quarter 1999 net worth covenant, the Company is no longer in compliance with the net worth covenant in its bank credit agreement as of March 31, 1999. The Company has obtained a waiver of this convenant through May 18, 1999 and has commenced discussions with its lenders to amend the net worth convenant to reflect the Company's present and expected future business operations. Although there can be no assurance that the Company will be able to obtain the necessary amendment, based upon preliminary discussions with its lenders, the Company believes that it will be able to negotiate the required convenant revisions. The failure to obtain such amendment could have a material adverse effect on the Company's financial condition.
Investment from Penske Capital Partners
The Company said that it had initiated regulatory approvals relating to the definitive agreement announced on April 12, 1999 to secure $83.0 million in new capital funding from Penske Capital Partners L.L.C. UnitedAuto will receive the first installment of approximately $33.5 million upon the receipt of such approvals and certain third party consents, at which time Roger S. Penske will succeed Marshall S. Cogan, the Company's founder, as Chairman and Chief Executive Officer. The second installment of approximately $49.5 million will be received at the final closing of the transaction and is subject to a number of conditions, including approval by a majority of UnitedAuto's shareholders and the receipt of third party consents.
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.
This press release contains forward-looking information, and actual results may materially vary from those expressed or implied herein. Factors, including, economic conditions, manufacturer approvals and acquisition risks, that could affect these results are described in the documents filed by the Company with the Securities and Exchange Commission.
UNITEDAUTO GROUP, INC.
Consolidated Statements of Operations (unaudited)
(Amounts in Thousands, Except Per Share Data)
First Quarter
1999 1998
Vehicle Sales $775,360 $616,974
Finance and Insurance 36,664 24,389
Service and Parts 92,708 70,346
Total Revenues 904,732 711,709
Cost of Sales, Including Floor Plan
Interest 786,477 622,485
Gross Profit 118,255 89,224
Selling, General and Administrative
Expenses 103,552 78,541
Operating Income 14,703 10,683
Other Interest Expense (8,442) (7,094)
Other Income(a) 794 353
Income From Continuing Operations
Before Minority Interests, Income Tax
Provision And Extraordinary Item 7,055 3,942
Minority Interests (148) (34)
Income Tax Provision (3,209) (1,617)
Income From Continuing Operations 3,698 2,291
Income From Discontinued Operations,
Net of Income Tax Provision -- 8
Income Before Extraordinary Item 3,698 2,299
Extraordinary Item, Net of Income Tax
Benefit (b) -- (1,235)
Net Income $3,698 $1,064
Diluted Earnings Per Share From
Continuing Operations $0.16 $0.12
Diluted Earnings Per Share $0.16 $0.05
Diluted Weighted Average Shares
Outstanding 23,307 19,924
EBITDA (c) $20,052 $14,475
(a) Represents fees received under management agreements at certain
dealerships for which acquisition is pending final manufacturer
approval.
(b) Represents the write-off of debt issuance costs related to the
termination of the Company's then existing credit facility in the
first quarter of 1998.
(c) EBITDA is defined as income from continuing operations before
minority interests, income tax provision, extraordinary item,
interest expense (exclusive of interest expense relating to floor
plan notes payable), depreciation and amortization.