Group 1 Posts 93% Revenue Gain, Net Income Doubles For Q1 1999
22 April 1999
Group 1 Posts 93% Revenue Gain, Net Income Doubles For First Quarter 1999
Highlights:
-- Diluted EPS $0.31 vs. $0.20, a 55% increase
-- Cash flow per share $0.41 vs. $0.25, a 64% increase
-- Gross and operating margins accelerate significantly
-- Previously announced Albuquerque, Atlanta, Beaumont and Tulsa
acquisitions closed
Summary Results of Operations (Unaudited)
(In millions, except per share amounts)
Three Months Ended
March 31,
1999 1998
Revenues $489.4 $253.9
Gross Profit $76.2 $36.0
Income from Operations $15.8 $7.5
Net Income $6.2 $3.1
Diluted Earnings per Share $0.31 $0.20
HOUSTON, April 22 -- 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
first quarter of 1999 compared with the same period last year. Significant
organic revenue growth and expanded gross and operating margins coupled with
contributions from successfully integrated acquisitions, drove the company's
strong financial performance.
Enhanced Revenues, Expanded Margins Boost Earnings
Revenues accelerated 93 percent to $489.4 million from $253.9 million for
the same period last year. Net income doubled to $6.2 million from
$3.1 million while diluted earnings per share grew to $0.31 from $0.20 a year
ago. Cash flow per share (net income plus depreciation and amortization)
increased to $0.41 from $0.25 a year ago.
Gross margin expanded to 15.6 percent from 14.2 percent during the
year-ago period. Margins on all revenue categories improved, and other
dealership revenues and parts and service revenues became a greater percentage
of total revenues. Income from operations more than doubled to $15.8 million
from $7.5 million, resulting in the operating margin expanding to 3.2 percent
from 2.9 percent. Group 1 has consistently achieved year-over-year quarterly
operating margin improvement since going public.
"I am pleased to announce that the momentum we generated in 1998 has
continued into 1999," said B.B. Hollingsworth Jr., Group 1's chairman,
president and chief executive officer. "Nationally, new vehicle sales were
outstanding in the first quarter with new unit sales up over 10 percent, and
we certainly benefited from this performance. More impressively, we were able
to increase our used vehicle sales and used vehicle gross margin in a quarter
characterized by strong new vehicle sales and advertising."
Hollingsworth noted that gross margins were up significantly in all
revenue categories. "We recorded our highest new vehicle and used vehicle
margins since going public," he said. Other dealership revenues continued to
grow more rapidly than vehicle unit sales, evidencing the success of the
company's finance, service and insurance contract programs, an area Group 1
has emphasized through new products and training programs. "One of the key
elements of our long-term growth strategy is to increase revenues from our
high-margin products," Hollingsworth added. "We will continue to provide our
co-workers with the skills and products necessary to realize this goal."
Acquisitions on Target
Further expansion of revenues and earnings, as well as geographic and
brand diversity, is targeted through acquisitions. Since year end, Group 1
has closed its previously announced acquisitions of Tidwell Ford in Atlanta,
Sunshine Pontiac, Buick and GMC in Albuquerque, N.M., and South Pointe
Chevrolet in Tulsa, Okla. Additionally, the company completed the
acquisitions of Cadillac and Pontiac franchises and the exchange of
Lincoln-Mercury franchises for a BMW franchise in Beaumont, Texas.
As previously announced, Group 1 has agreed to acquire an additional
20 dealership franchises with aggregate revenues of over $545 million,
including two new platforms -- Gene Messer Automotive Group, which will become
Group 1's West Texas platform, and Sandy Sansing Automotive Group, which will
become the company's north Florida platform. "The Messer Group is on track to
close during the second quarter and the remainder of the acquisitions in the
third quarter," Hollingsworth said.
The acquisitions are subject to customary closing conditions, including
approval of various manufacturers, government agencies and completion of due
diligence. Once all acquisitions are completed, Group 1's annualized revenue
run rate will be over $2.4 billion, representing more than 100,000 retail car
and truck sales.
Additional Resources for Acquisition Strategy
On March 5, the company announced that it sold 2 million shares of common
stock and $100 million in 10-year senior subordinated notes. Net proceeds to
the company totaled $140 million. "We were pleased with the successful
offerings," Hollingsworth said. "The proceeds give us the resources necessary
to pursue our strategy of making select acquisitions in the automotive
retailing industry."
Group 1 has received commitments to increase its revolving credit facility
to $500 million, lower the interest rate on the floorplan portion of the
facility, reduce certain administration costs and favorably modify certain
loan covenants. The company also announced that two automotive captive
finance subsidiaries, Ford Motor Credit Company and Toyota Motor Credit
Corporation, will join the company's bank syndicate, bringing the total
syndicate membership to 12. Currently, the acquisition portion of this
facility is undrawn.
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 83 dealership franchises comprised of 24 different brands,
and 17 collision service centers located in Texas, Oklahoma, Florida, New
Mexico, Colorado, 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, vehicle service and
insurance 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.
For additional information regarding Group 1 Automotive free of charge via
fax, dial 1-800-PRO-INFO and use the company's stock symbol, "GPI."
Group 1 Automotive, Inc. can be reached on the Internet at
http://www.group1auto.com
Group 1 Automotive, Inc.
Statements of Operations
(Dollars in thousands, except per share amounts)
Three Months Ended
March 31,
1999 1998
(unaudited)
REVENUES:
New vehicle $270,118 $138,022
Used vehicle 159,779 87,119
Parts & service 43,774 21,568
Other dealership revenues, net 15,680 7,225
Total revenues 489,351 253,934
COST OF SALES:
New vehicle 247,373 127,376
Used vehicle 146,148 80,560
Parts & service 19,636 9,978
Total cost of sales 413,157 217,914
Gross profit 76,194 36,020
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 58,278 27,736
DEPRECIATION AND AMORTIZATION 2,091 819
Income from operations 15,825 7,465
OTHER INCOME (EXPENSE):
Floorplan interest expense (3,847) (1,824)
Other interest expense, net (1,786) (312)
Other income (expense), net 36 (23)
Income before income taxes 10,228 5,306
PROVISION FOR INCOME TAXES 4,071 2,192
NET INCOME $6,157 $3,114
Basic earnings per share $0.33 $0.21
Diluted earnings per share $0.31 $0.20
Diluted cash flow per share $0.41 $0.25
Weighted average shares outstanding:
Basic 18,921,723 15,197,670
Diluted 19,989,005 15,596,155
Other Data:
Gross margin 15.6% 14.2%
Operating margin 3.2% 2.9%
Pretax income margin 2.1% 2.1%
Retail new vehicles sold 11,324 5,972
Retail used vehicles sold 10,021 5,354
Total retail sales 21,345 11,326
Group 1 Automotive, Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
March 31, December 31,
1999 1998
(unaudited) (audited)
ASSETS:
Current assets:
Cash and cash equivalents $72,029 $66,443
Inventories, net 262,940 219,176
Other assets, net 40,525 41,303
Total current assets 375,494 326,922
Property, plant and equipment, net 26,313 21,960
Goodwill, net 134,774 123,587
Other assets 8,215 5,241
Total assets $544,796 $477,710
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Floorplan notes payable $158,761 $193,405
Other interest-bearing liabilities 424 2,966
Accounts payable and accrued expenses 79,223 82,300
Total current liabilities 238,408 278,671
Debt 98,849 42,821
Other liabilities 19,116 20,034
Total stockholders' equity 188,423 136,184
Total liabilities and stockholders'
equity $544,796 $477,710
OTHER DATA:
Working capital $137,086 $48,251
Current ratio 1.58 1.17
Unused acquisition line of credit $110,000 $88,000
Non-floorplan debt to capitalization 35% 25%