Group 1 Posts Double-Digit Gains in Revenues, Earnings for Second Quarter
22 July 1999
Group 1 Posts Double-Digit Gains in Revenues, Earnings for Second Quarter, First Six Months of 1999
Revenues Exceed $1 Billion or Six-Month Period;
Earnings Growth Outpaces Revenue Growth
Highlights:
-- Q2 net income jumps 63% on 45% revenue growth
-- Q2 diluted EPS $0.42 vs. $0.31, a 35% increase on 21% more shares
-- Six-month revenues grow 63% to over $1 billion; net income up 76%
-- Gross and operating margins accelerate significantly for quarter and
six months
Summary Results of Operations (Unaudited)
(In millions, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
Revenues $625.4 $431.5 $1,114.8 $685.5
Gross profit $93.7 $60.4 $169.9 $96.4
Income from operations $22.5 $13.8 $38.4 $21.3
Net income $9.2 $5.6 $15.3 $8.7
Diluted earnings per share $0.42 $0.31 $0.73 $0.52
HOUSTON, July 22 -- Group 1 Automotive, Inc. , a
leading operator and consolidator in the automotive retailing industry, today
reported double-digit gains in revenues, income from operations, net income
and earnings per share for the second quarter and first six months of 1999.
Strong revenue growth in all revenue categories, coupled with continued
improvement in operating margin, drove the company's strong performance.
Second-Quarter Results Demonstrate Continued Successful Execution
For the second quarter ended June 30, 1999, revenues increased 45 percent
to $625.4 million from $431.5 million for the same period last year as
revenues in all categories increased substantially. Net income accelerated
63 percent, reaching $9.2 million, or $0.42 per share on a diluted basis,
compared with $5.6 million, or $0.31 per share on a diluted basis, for the
same period last year. Cash flow per share (net income plus depreciation and
amortization) increased to $0.53 from $0.39 a year ago. The increases in
earnings per share and cash flow per share were achieved despite being
calculated on 21 percent more shares this quarter.
Gross margin expanded to 15.0 percent from 14.0 percent during the
comparable period last year as margins on all revenue categories improved.
Income from operations jumped 63 percent to $22.5 million from $13.8 million,
resulting in the operating margin expanding to 3.6 percent from 3.2 percent.
Group 1 has consistently achieved year-over-year quarterly operating margin
improvement since going public.
"I am pleased to announce another exceptionally strong quarter," said
B.B. Hollingsworth Jr., Group 1's chairman, president and chief executive
officer. "Our performance this quarter with earnings growth significantly
outpacing revenue growth demonstrates the benefits being realized as we
execute our consolidation and operating strategy."
Six-Month Revenues Top $1 Billion
For the first six months of 1999, revenues reached $1.1 billion, a
63 percent increase from $685.5 million for the same period last year.
Revenues from new vehicles, used vehicles, parts and service, and other
dealership revenue increased substantially. Net income jumped 76 percent to
$15.3 million, or $0.73 per share on a diluted basis, compared with
$8.7 million, or $0.52 per share on a diluted basis, for the same period last
year. Diluted earnings per share for the 1999 period were calculated on
21.0 million shares compared with 16.9 million shares last year. Diluted cash
flow per share increased to $0.95 from $0.66 in the year-ago period.
Gross margin expanded to 15.2 percent from 14.1 percent during the
comparable period last year. Income from operations jumped 80 percent to
$38.4 million from $21.3 million, resulting in the operating margin expanding
to 3.4 percent from 3.1 percent.
"So far, 1999 has been a record-setting year for new vehicle sales, and we
certainly have benefited from this. More importantly, we continue to
demonstrate the successful implementation of our strategy and the realization
of synergies that lead to expanding profit margins. We are looking forward to
an outstanding year," Hollingsworth said.
Recent Acquisitions Expected to Contribute to 1999 Second Half
Since the beginning of 1999, Group 1 has closed previously announced
acquisitions comprised of 22 franchises with revenues of over $520 million,
including Gene Messer Automotive Group, a new West Texas platform. Also
included are 11 tuck-in franchises that add to established platforms in
Atlanta, Albuquerque, N.M., Tulsa, Okla., Dallas, and Beaumont, Texas. "We
are pursuing our disciplined strategy of select acquisitions of platform and
tuck-in dealership groups that meet our criteria," Hollingsworth commented.
"Currently, we have sufficient financial resources to continue to execute our
acquisition strategy, with $94.3 million in working capital and an undrawn
acquisition line of credit of $110 million."
Voluntary Relock Demonstrates Commitment
Group 1 also announced that its directors and operators have voluntarily
agreed to an additional lock-up period for 9.8 million shares of company
stock, including 1.6 million shares for which the lock-up period has already
expired. The shares being relocked will be restricted until July 15, 2000.
As a part of the voluntary lock-up agreement, Group 1 included 883,116
secondary shares in its $105 million universal shelf registration statement,
which replaced the previous shelf registration statement.
According to Hollingsworth, "All shareholders that were asked to consider
the additional lock-up agreed. This demonstrates their commitment to and
belief in the company we are building.
"One of our strategic objectives is to align interests of management and
shareholders," Hollingsworth continued. "A part of our acquisition strategy
is for the principals of acquired dealerships to receive a significant portion
of their consideration in unregistered stock and agree to a lock-up. This
keeps them intimately involved in our organization over the long run,
motivates them to succeed and sets the example for future acquisition
candidates."
Group 1, with an annualized revenue run rate of over $2.3 billion, is a
leading operator and consolidator in the highly fragmented automotive
retailing industry. Upon completion of one announced acquisition, Group 1
will own 79 dealership franchises comprised of 26 different brands, and 15
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
(Unaudited)
(In thousands of dollars, except share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
Revenues:
New vehicle $362,409 $251,019 $632,527 $389,041
Used vehicle 191,560 133,625 351,339 220,745
Parts & service 51,498 34,154 95,272 55,722
Other dealership
revenue, net 19,932 12,733 35,612 19,958
Total revenues 625,399 431,531 1,114,750 685,466
Cost Of Sales:
New vehicle 332,915 231,504 580,288 358,880
Used vehicle 175,636 123,898 321,785 204,458
Parts & service 23,191 15,776 42,827 25,754
Total cost of sales 531,742 371,178 944,900 589,092
Gross Profit 93,657 60,353 169,850 96,374
Selling, General
and Administrative
Expenses 68,621 45,044 126,899 72,780
Depreciation and
Amortization 2,509 1,516 4,600 2,335
Income from operations 22,527 13,793 38,351 21,259
Other Income (Expense):
Floorplan interest
expense (4,338) (3,479) (8,185) (5,304)
Other interest
expense, net (3,015) (627) (4,801) (938)
Other income
(expense), net 69 (24) 105 (48)
Income Before
Income Taxes 15,243 9,663 25,470 14,969
Provision For
Income Taxes 6,066 4,042 10,137 6,234
Net Income $9,177 $5,621 $15,333 $8,735
Basic earnings
per share $0.44 $0.32 $0.77 $0.54
Diluted earnings
per share $0.42 $0.31 $0.73 $0.52
Diluted cash
flow per share $0.53 $0.39 $0.95 $0.66
Weighted average
shares outstanding:
Basic 20,947,850 17,441,678 19,940,384 16,325,873
Diluted 21,960,640 18,128,366 20,980,269 16,869,256
Other Data:
Gross margin 15.0% 14.0% 15.2% 14.1%
Operating margin 3.6% 3.2% 3.4% 3.1%
Pretax income margin 2.4% 2.2% 2.3% 2.2%
Retail new vehicles sold 15,046 10,767 26,370 16,739
Retail used vehicles
sold 11,651 7,991 21,672 13,345
Total retail sales 26,697 18,758 48,042 30,084
Group 1 Automotive, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
June 30, December 31,
1999 1998
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $92,504 $66,443
Inventories, net 326,679 219,176
Other assets, net 49,177 41,303
Total current assets 468,360 326,922
Property and equipment, net 30,044 21,960
Goodwill, net 197,624 123,587
Other assets 7,239 5,241
Total assets $703,267 $477,710
Liabilities and Stockholders' Equity
Current liabilities:
Floorplan notes payable $280,258 $193,405
Other interest-bearing liabilities 506 2,966
Accounts payable and accrued expenses 93,316 82,300
Total current liabilities 374,080 278,671
Debt 99,189 42,821
Other liabilities 19,788 20,034
Total stockholders' equity 210,210 136,184
Total liabilities and
stockholders' equity $703,267 $477,710
Other Data:
Working capital 94,280 $48,251
Current ratio 1.25 1.17
Unused acquisition
line of credit $110,000 $88,000
Non-floorplan debt
to capitalization 32% 25%