Group 1 Records Double-Digit Gains in Revenues, Operating Earnings
28 October 1999
Group 1 Records Double-Digit Gains in Revenues, Operating Earnings, Net Income for 1999 Third Quarter, Nine Months Third-Quarter Net Income Up 62% on 49% Revenue Growth; Operating Margin Continues to Increase
Highlights:
-- Q3 diluted EPS up 37% to $0.48 on 17% more shares
-- Nine-month diluted EPS $1.21, a 39% gain on 22% share increase
-- Q3, nine-month operating margins continue to expand
Summary Results of Operations (Unaudited)
(In millions, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
Revenues $701.8 $472.1 $1,816.5 $1,157.5
Gross profit $105.1 $71.0 $274.9 $167.3
Income from operations $25.7 $16.4 $64.1 $37.7
Net income $10.5 $6.5 $25.9 $15.3
Diluted earnings per
share $0.48 $0.35 $1.21 $0.87
HOUSTON, Oct. 27 -- 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 third quarter and first nine months of 1999.
Significant revenue growth in all categories, as well as continued improvement
in operating margin, drove the company's record performance.
Enhanced Revenues and Operating Margin Boost Earnings
For the third quarter ended September 30, 1999, revenues grew 49 percent
to $701.8 million from $472.1 million for the same period last year. Net
income increased 62 percent to $10.5 million from $6.5 million, while diluted
earnings per share grew 37 percent to $0.48 from $0.35 a year ago. Cash flow
per share (net income plus depreciation and amortization) increased to $0.60
from $0.45 in the 1998 period. The increases in earnings and cash flow per
share were achieved despite being calculated on 22.1 million shares compared
with 18.9 million shares last year, a 17 percent higher number of shares
outstanding.
The gross margin was steady at 15.0 percent. Income from operations rose
57 percent to $25.7 million from $16.4 million, resulting in the operating
margin expanding to 3.7 percent from 3.5 percent in the year-ago period.
Group 1 has achieved year-over-year improvements in operating margin 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.
"We saw solid internal growth as well as contributions from acquisitions. We
are benefiting from internal operating initiatives, the successful integration
of our acquisitions and a robust new vehicle market."
Nine-Month Performance Surpasses Full-Year 1998 Results
For the first nine months, revenues accelerated 57 percent to $1.8 billion
from $1.2 billion in the 1998 period. Net income increased 70 percent to
$25.9 million, or $1.21 per diluted share, compared with $15.3 million, or
$0.87 per diluted share. Cash flow per share was $1.56 compared with $1.12.
Per-share amounts for the 1999 period were calculated on 21.4 million shares
compared with 17.5 million shares last year.
Gross margin was 15.1 percent compared with 14.5 percent a year ago as
margins expanded in all categories. Income from operations rose 70 percent to
$64.1 million from $37.7 million. The operating margin expanded to
3.5 percent from 3.3 percent in the year-ago period.
"We are very proud of our achievements in expanding operating income and
margin," Hollingsworth said. "Our operating leverage has been significant.
We have proven that select acquisitions executed under a disciplined strategy
can produce solid earnings growth."
Amarillo Operations Expand
Lone Star Chrysler-Plymouth-Mitsubishi, with operations in Amarillo,
Texas, has been acquired and added to Group 1's West Texas platform. This
tuck-in acquisition is expected to generate approximately $30 million annually
in revenues.
Since the beginning of 1999, Group 1 has closed previously announced
acquisitions comprised of 23 franchises with revenues of over $550 million.
Another 24 franchise acquisitions are pending which, when completed, will
boost the company's annual revenue run rate to over $3 billion. Hollingsworth
confirmed the company would continue to seek acquisitions that meet its
standards.
Credit Facility Doubled
The company recently announced that its revolving credit facility was
doubled to $1 billion, including a $220 million tranche for acquisitions, and
extended to December 31, 2003. Lending syndicate members include 11 banks, as
well as five automotive captive finance companies. The acquisition portion of
the facility is not drawn.
"This transaction will provide the resources to support our disciplined
acquisition strategy of high-quality growth, and expands our relationships
with automobile manufacturers," Hollingsworth said.
Group 1 is a leading operator and consolidator in the highly fragmented
automotive retailing industry. Upon completion of the announced acquisitions,
Group 1 will have an annualized revenue run rate of over $3 billion, and will
own 104 dealership franchises comprised of 31 different brands, and 18
collision service centers located in Texas, Oklahoma, Florida, New Mexico,
Colorado, Georgia, Louisiana and Massachusetts. Through its dealerships and
Internet sites, 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 Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
REVENUES:
New vehicles $418,244 $273,282 $1,050,771 $662,323
Used vehicles 203,059 142,351 554,398 363,096
Parts & service 58,188 41,542 153,460 97,264
Other dealership
revenue, net 22,299 14,875 57,911 34,833
Total revenues 701,790 472,050 1,816,540 1,157,516
COST OF SALES:
New vehicles 382,941 251,038 963,229 609,918
Used vehicles 187,070 130,722 508,855 335,180
Parts & service 26,684 19,327 69,511 45,081
Total cost of sales 596,695 401,087 1,541,595 990,179
Gross Profit 105,095 70,963 274,945 167,337
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES 76,558 52,502 203,457 125,282
DEPRECIATION EXPENSE 1,220 1,127 3,397 2,650
AMORTIZATION EXPENSE 1,605 913 4,028 1,725
Income from operations 25,712 16,421 64,063 37,680
OTHER INCOME (EXPENSE):
Floorplan interest
expense (5,438) (3,690) (13,623) (8,994)
Other interest
expense, net (2,904) (1,767) (7,705) (2,705)
Other income
(expense), net 104 40 209 (8)
INCOME BEFORE
INCOME TAXES 17,474 11,004 42,944 25,973
PROVISION FOR
INCOME TAXES 6,955 4,489 17,092 10,723
NET INCOME $10,519 $6,515 $25,852 $15,250
Basic earnings
per share $0.49 $0.36 $1.27 $0.90
Diluted earnings
per share $0.48 $0.35 $1.21 $0.87
Diluted cash flow
per share $0.60 $0.45 $1.56 $1.12
Weighted average
shares outstanding:
Basic 21,253,799 18,199,646 20,383,000 16,957,327
Diluted 22,106,027 18,855,004 21,359,645 17,538,446
Other Data:
Gross margin 15.0% 15.0% 15.1% 14.5%
Operating margin 3.7% 3.5% 3.5% 3.3%
Pretax income margin 2.5% 2.3% 2.4% 2.2%
Retail new
vehicles sold 17,259 11,901 43,629 28,640
Retail used
vehicles sold 12,454 9,086 34,126 22,431
Total retail sales 29,713 20,987 77,755 51,071
GROUP 1 AUTOMOTIVE, INC.
Condensed Consolidated Balance Sheets
(In thousands)
September 30, December 31,
1999 1998
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash
equivalents $103,947 $66,443
Inventories, net 289,314 219,176
Other assets, net 48,843 41,303
Total current assets 442,104 326,922
Property and equipment,
net 36,492 21,960
Goodwill, net 200,468 123,587
Other assets 10,201 5,241
Total assets $689,265 $477,710
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Floorplan notes payable $246,241 $193,405
Other interest-bearing
liabilities 1,101 2,966
Accounts payable
and accrued expenses 100,228 82,300
Total current
liabilities 347,570 278,671
Debt 102,032 42,821
Other liabilities 19,368 20,034
Total stockholders' equity 220,295 136,184
Total liabilities
and stockholders'
equity $689,265 $477,710
OTHER DATA:
Working capital $94,534 $48,251
Current ratio 1.27 1.17
Long-term debt
to capitalization 32% 25%