Group 1 Posts Double-Digit Gains in Revenues
28 July 2000
Earnings For Record Second Quarter and First Six Months of 2000
Highlights:
-- Revenues up 49% for Q2; operating income rises 45%
-- Q2 diluted EPS $0.54, a 29% increase
-- Six-month revenues increase 61%; diluted EPS up 27% to $0.93
-- Cash flow per share $0.72 for Q2, $1.28 for six months
Summary Results of Operations (Unaudited)
(In millions, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Revenues $ 930.1 $ 625.4 $ 1,790.0 $ 1,114.8
Gross profit $ 135.7 $ 93.7 $ 261.0 $ 169.9
Income from
operations $ 32.6 $ 22.5 $ 58.4 $ 38.4
Net income $ 11.9 $ 9.2 $ 20.9 $ 15.3
Diluted earnings
per share $ 0.54 $ 0.42 $ 0.93 $ 0.73
HOUSTON - Group 1 Automotive, Inc. , a leading operator in the automotive
retailing industry, today reported double-digit gains in revenues, operating
income and net income for the second quarter and first six months of 2000.
Continued successful execution of the company's business strategy and strong new
vehicle sales combined to produce the record results.
Strong New Vehicle Market Continues
For the second quarter ended June 30, 2000, revenues grew 49 percent to
$930.1 million from $625.4 million for the same period last year. New vehicle
revenues grew 54 percent and unit sales were up 51 percent. Used vehicle
revenues expanded 39 percent and unit sales were up 34 percent. Parts and
service and other dealership revenues grew 46 percent and 44 percent,
respectively.
Net income increased 30 percent to $11.9 million from $9.2 million, while
diluted earnings per share grew 29 percent to $0.54 from $0.42 a year ago.
Diluted cash flow per share, defined as net income plus depreciation and
amortization, increased 36 percent to $0.72 from $0.53 in the 1999 period.
Gross margin for the quarter was 14.6 percent compared with 15.0 percent
during the year-ago period. This was partly due to a shift in the company's
merchandising mix as new vehicle sales, which carry the lowest margin,
accelerated rapidly. In addition, acquisitions with lower gross margins were
recently integrated into the company. Income from operations rose to
$32.6 million from $22.5 million, a 45 percent increase. Operating margin
dipped slightly to 3.5 percent from 3.6 percent primarily due to the shift in
merchandising mix.
"I am pleased to announce another record quarter for both revenues and
earnings," said B.B. Hollingsworth Jr., Group 1's chairman, president and
chief executive officer. "Our dealerships turned in a solid performance as we
again saw an exceptionally strong new vehicle market." Hollingsworth noted
that from a brand standpoint, Toyota, Ford and Honda were among the strongest
performers.
Record Performance for Six Months
For the first six months of 2000, revenues reached $1.8 billion, a
61 percent increase from $1.1 billion for the same period last year. New
vehicle revenues grew 69 percent and unit sales were up 65 percent. Used
vehicle revenues expanded 47 percent and unit sales were up 40 percent. Parts
and service and other dealership revenues grew 55 percent and 54 percent,
respectively. Net income increased 37 percent to $20.9 million, or $0.93 per
diluted share, compared with $15.3 million, or $0.73 per diluted share for the
first six months of 1999. Diluted cash flow per share increased 35 percent to
$1.28 from $0.95.
Year-to-date gross margin for 2000 was 14.6 percent compared with
15.2 percent in the 1999 period. Income from operations rose 52 percent to
$58.4 million from $38.4 million, and the operating margin was 3.3 percent
compared with 3.4 percent last year. The shift in merchandising mix that
impacted margins in the second quarter had a similar effect on the six-month
period.
"To date, 2000 has been another record-setting year for new vehicle sales,
and we continue to benefit from this. Currently, the industry is operating at
a record run rate, and this positively impacted our revenues this quarter and
should positively impact our future parts and service business," Hollingsworth
said. "We are very pleased with our overall operations, which have resulted
in increased profitability and cash-flow generation. Our capital position
continues to be strong and our operating cash flow, supplemented as needed by
our revolving credit line, can support future investments. "
Internet Marketing Program Enhanced
Group 1 announced that it added the Select-A-Car(TM) Internet Selling
System application to its Internet marketing programs. Select-A-Car features
will include needs analysis, model comparison between different trim levels
and makes, automobile configuration, pricing and other elements to assist
online consumers with the decision-making and car-purchasing processes.
Visitors to Group 1's test site will be able to search for cars that meet
their specific needs, compare models side by side, and then build virtual cars
complete with selected colors, packages, options and prices. Based on the
results of this test program, the company will determine if a national rollout
is appropriate. Group 1 continues to use an array of programs and
affiliations to obtain quality customers, including direct links to
manufacturers' Internet sites.
Group 1 is a leading operator in the automotive retailing industry. The
company has an annualized revenue run rate of over $3.4 billion, and owns 98
dealership franchises comprised of 29 different brands, and 19 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.
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,
2000 1999 2000 1999
REVENUES:
New vehicle $559,819 $362,409 $1,071,236 $632,527
Used vehicle 266,381 191,560 516,078 351,339
Parts & service 75,223 51,498 148,067 95,272
Other dealership
revenues, net 28,714 19,932 54,667 35,612
Total revenues 930,137 625,399 1,790,048 1,114,750
COST OF SALES:
New vehicle 516,101 332,915 987,908 580,288
Used vehicle 244,691 175,636 474,316 321,785
Parts & service 33,648 23,191 66,777 42,827
Total cost of sales 794,440 531,742 1,529,001 944,900
Gross Profit 135,697 93,657 261,047 169,850
SELLING, GENERAL
AND ADMINISTRATIVE
EXPENSES 99,028 68,621 194,848 126,899
DEPRECIATION EXPENSE 1,920 1,144 3,670 2,177
AMORTIZATION EXPENSE 2,127 1,365 4,138 2,423
Income from operations 32,622 22,527 58,391 38,351
OTHER INCOME (EXPENSE):
Floorplan interest
expense (9,582) (4,338) (17,955) (8,185)
Other interest
expense, net (3,799) (3,015) (7,682) (4,801)
Other income
(expense), net (1) 69 1,023 105
INCOME BEFORE
INCOME TAXES 19,240 15,243 33,777 25,470
PROVISION FOR
INCOME TAXES 7,311 6,066 12,835 10,137
NET INCOME $11,929 $9,177 $20,942 $15,333
Basic earnings
per share $0.55 $0.44 $0.95 $0.77
Diluted earnings
per share $0.54 $0.42 $0.93 $0.73
Diluted cash flow
per share $0.72 $0.53 $1.28 $0.95
Weighted average
shares outstanding:
Basic 21,846,856 20,947,850 22,115,594 19,940,384
Diluted 22,230,813 21,960,640 22,506,251 20,980,269
Other Data:
Gross margin 14.6% 15.0% 14.6% 15.2%
Operating margin 3.5% 3.6% 3.3% 3.4%
Pretax income margin 2.1% 2.4% 1.9% 2.3%
EBITDA $36,668 $25,105 $67,222 $43,056
Retail new vehicles
sold 22,687 15,046 43,466 26,370
Retail used vehicles
sold 15,630 11,651 30,281 21,672
Total retail sales 38,317 26,697 73,747 48,042
Group 1 Automotive, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
June 30, December 31,
2000 1999
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $114,419 $118,824
Inventories, net 464,589 386,255
Other assets, net 58,036 48,344
Total current assets 637,044 553,423
Property and equipment, net 62,439 46,711
Goodwill, net 260,641 235,312
Other assets 7,002 7,464
Total assets $967,126 $842,910
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Floorplan notes payable $424,731 $363,489
Other interest-bearing liabilities 1,770 1,076
Accounts payable and accrued expenses 115,677 108,730
Total current liabilities 542,178 473,295
Debt 154,179 113,174
Other liabilities 24,364 24,412
Stockholders' equity:
Common stock 224 218
Additional paid-in capital 187,024 181,398
Retained earnings 72,646 51,705
Treasury stock (13,489) (1,292)
Total stockholders' equity 246,405 232,029
Total liabilities and stockholders' equity $967,126 $842,910
OTHER DATA:
Working capital $94,866 $80,128
Current ratio 1.17 1.17
Long-term debt to capitalization 39% 33%