EX-99.1 3 k78572exv99w1.htm PRESS RELEASE DATED JULY 30, 2003 exv99w1
 

Exhibit 99.1

Press Release

United Auto
  UnitedAuto Group, Inc.
2555 Telegraph Rd.
Bloomfield Hills MI 48302-0954

             
Contact:   Roger Penske   Jim Davidson   Tony Pordon
    Chairman   Executive VP — Finance   Vice President — Investor Relations
    248-648-2400   201-325-3303   248-648-2540
        jdavidson@unitedauto.com   tony.pordon@unitedauto.com

UNITEDAUTO REPORTS RECORD SECOND QUARTER

Revenues Increase 18.7%

Income from Continuing Operations Per Share Increases 7.5%

Same Store Retail Revenues Increase 11.0% and Related Gross Profit Increases 10.9%

     BLOOMFIELD HILLS, MI, JULY 30, 2003 — United Auto Group, Inc. (NYSE: UAG), a FORTUNE 500 automotive specialty retailer, announced today that revenues for the second quarter increased 18.7% to a record $2.2 billion. The increase in revenue includes an 11.0% increase in same-store retail revenues, with each of the Company’s product offerings experiencing same store growth. The same store growth consists of increases in new retail vehicle sales, used retail vehicle sales, service and parts sales, and finance and insurance revenues of 9.0%, 16.9%, 9.3% and 18.6%, respectively. Income from continuing operations was $23.3 million and related earnings per share was $0.57, an increase of 7.5%. Net income was $23.9 million and earnings per share increased 3.6% to $0.58.

     For the six months ended June 30, 2003, revenues increased 22.0% to $4.2 billion. Income from continuing operations was $40.1 million and related earnings per share was $0.98, an increase of 6.5%. Net income was $37.6 million and related earnings per share was $0.92. Net income for the six months includes a $3.1 million, or $0.07 per share, charge as a result of the cumulative effect of a change in accounting principle recorded in the first quarter in connection with the adoption of EITF 02-16.

     Chairman Roger Penske commented, “We believe that our robust same store growth is the direct result of our brand mix, our focus on increasing units in operation and our capital investment strategy,

 

 

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which we believe will continue to generate future growth in all aspects of our business. I am particularly pleased with the 9.3% same-store increase in our higher margin service and parts business, which, coupled with a 70 basis point expansion in our overall service and parts margin to 47.9%, is indicative that our investment in service capacity continues to yield results. We reiterate our annual earnings projection of $1.96 — $2.06 per share (excluding the cumulative effect of the change in accounting principle), with a third quarter estimate of $0.58 — $0.62 per share.”

     Sam DiFeo, Jr., President, added “Our strategies and business model are being validated by our strong same store performance. During the second quarter, our U.S. businesses experienced 5.4% same store new retail unit volume growth, which compares to an overall U.S. market decline of 0.6%. In addition, the 16.9% increase in same store used retail revenues was significantly stronger than the overall used vehicle market. As we enter the third quarter and continue through the primary vehicle sales season in many of our markets, we are confident that our improving days supply of inventories will allow us to maximize profitability. As of June 30, 2003, our new and used vehicle inventory supplies were 56 days and 31 days, respectively, on a thirty day trailing basis.”

     This quarter’s outstanding results were achieved despite a $1.9 million, or $0.05 per share, reduction of income as the result of an adjustment to reverse $3.1 million of revenue that was falsely recorded during the 23-month period preceding March 31, 2003. The $3.1 million revenue overstatement was discovered during a routine internal audit of the books and records of the Company’s Arkansas dealerships. The Company, with the concurrence of the Audit Committee of its Board of Directors, has determined that the overstatement was immaterial to the Company’s financial statements.

     UnitedAuto, which has pursued a strategy based on internal growth from its existing dealerships, as well as from strategic acquisitions, operates 137 franchises in the United States and 74 franchises internationally, primarily in the United Kingdom. UnitedAuto dealerships sell new and used vehicles, and market a complete line of aftermarket automotive products and services.

     UnitedAuto will host a conference call discussing financial results relating to second quarter 2003 on Wednesday, July 30, 2003 at 9A.M. Eastern time. Advance registration is not required. Participants must call (888) 428-4471 (International, please call (612) 332-0107). Calls need to be made shortly before the call is to commence. The call will also be simultaneously broadcast live over the Internet through the UnitedAuto website at www.unitedauto.com.

     Statements in this press release may involve forward-looking statements, including forward-looking statements regarding UnitedAuto’s future sales and earnings growth potential. Actual results may vary materially because of risks and uncertainties, including external factors such as interest rate fluctuations, changes in consumer spending and other factors over which management has no control.

 

 

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These forward-looking statements should be evaluated together with additional information about UnitedAuto’s business, markets, conditions and other uncertainties which could affect UnitedAuto’s future performance, which are contained in UnitedAuto’s Form 10-K for the year ended December 31, 2002 and its other filings with the Securities and Exchange Commission and which are incorporated into this press release by reference. This press release speaks only as of its date and UnitedAuto disclaims any duty to update the information herein.

 

 

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UNITED AUTO GROUP, INC.
Consolidated Statements of Income (Unaudited)
(Amounts In Thousands, Except Per Share Data)

                     
        Second Quarter  
       
 
        2003     2002  
       
   
 
New Vehicles
   $ 1,309,351     $ 1,114,200  
Used Vehicles
     487,460       388,206  
Finance and Insurance
     54,056       44,498  
Service and Parts
     229,801       192,588  
Fleet
     39,168       28,595  
Wholesale
     127,719       125,818  
 
  
   
 
 
Total Revenues
     2,247,555       1,893,905  
Cost of Sales
     1,927,976       1,624,991  
 
  
   
 
 
Gross Profit
     319,579       268,914  
SG&A Expenses
     249,620       205,677  
Depreciation and Amortization
     7,754       5,839  
 
  
   
 
 
Operating Income
     62,205       57,398  
Floor Plan Interest Expense
     (11,657 )     (8,538 )
Other Interest Expense
     (10,908 )     (9,976 )
 
  
   
 
 
Income from Continuing Operations Before Minority
                
   
Interests and Income Tax Provision
     39,640       38,884  
Minority Interests
     (658 )     (509 )
Income Tax Provision
     (15,660 )     (15,750 )
 
  
   
 
 
Income from Continuing Operations
     23,322       22,625  
Income from Discontinued Operations, Net of Tax
     542       1,264  
 
  
   
 
 
Net Income
   $ 23,864     $ 23,889  
 
  
   
 
Income from Continuing Operations Per Diluted Share
   $ 0.57     $ 0.53  
 
  
   
 
Diluted EPS
   $ 0.58     $ 0.56  
 
  
   
 
Diluted Weighted Average Shares Outstanding
     41,176       42,841  
 
  
   
 

 

 

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UNITED AUTO GROUP, INC.
Consolidated Statements of Income (Unaudited)
(Amounts In Thousands, Except Per Share Data)

                       
          Six Months  
         
 
          2003     2002  
         
   
 
New Vehicles
   $ 2,411,981     $ 2,044,863  
Used Vehicles
     925,590       678,800  
Finance and Insurance
     101,988       80,818  
Service and Parts
     441,959       352,572  
Fleet
     67,179       59,919  
Wholesale
     247,709       221,817  
 
  
   
 
 
Total Revenues
     4,196,406       3,438,789  
Cost of Sales
     3,594,198       2,947,323  
 
  
   
 
 
Gross Profit
     602,208       491,466  
SG&A Expenses
     477,297       381,920  
Depreciation and Amortization
     15,037       10,172  
 
  
   
 
 
Operating Income
     109,874       99,374  
Floor Plan Interest Expense
     (20,659 )     (16,747 )
Other Interest Expense
     (21,258 )     (17,844 )
 
  
   
 
 
Income from Continuing Operations Before Minority
                
     
Interests and Income Tax Provision
     67,957       64,783  
Minority Interests
     (1,051 )     (925 )
Income Tax Provision
     (26,845 )     (26,008 )
 
  
   
 
 
Income from Continuing Operations
     40,061       37,850  
Income from Discontinued Operations, Net of Tax
     594       1,750  
 
  
   
 
   
Income Before Cumulative Effect of Accounting Change
     40,655       39,600  
Cumulative Effect of Accounting Change (a)
     (3,058 )     —  
 
  
   
 
 
Net Income
   $ 37,597     $ 39,600  
 
  
   
 
Income from Continuing Operations Per Diluted Share
   $ 0.98     $ 0.92  
 
  
   
 
Diluted EPS before Cumulative Effect of Accounting Change
   $ 0.99     $ 0.96  
 
  
   
 
Cumulative Effect of Accounting Change on Diluted EPS
     ($0.07 )   $ —  
 
  
   
 
Diluted EPS
   $ 0.92     $ 0.96  
 
  
   
 
Diluted Weighted Average Shares Outstanding
     40,994       41,076  
 
  
   
 

(a)   Represents a cumulative accounting change resulting from the adoption of EITF 02-16, “Accounting by a Customer (including a Reseller) for Certain Consideration Received from a Vendor.”

 

 

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UNITED AUTO GROUP, INC.
Consolidated Condensed Balance Sheets
(Amounts In Thousands)

                   
      6/30/03     12/31/02  
     
   
 
Assets
   (unaudited)          
Cash and Cash Equivalents
   $ 15,473     $ 8,909  
Accounts Receivable, Net
     358,194       313,503  
Inventories
     1,095,073       954,834  
Other Current Assets
     42,195       27,797  
 
  
   
 
 
Total Current Assets
     1,510,935       1,305,043  
Property and Equipment, Net
     381,937       310,647  
Intangibles
     1,048,406       977,556  
Assets of Discontinued Operations
     10,813       30,396  
Other Assets
     70,475       66,672  
 
  
   
 
 
Total Assets
   $ 3,022,566     $ 2,690,314  
 
  
   
 
Liabilities and Stockholders’ Equity
                
Floor Plan Notes Payable
   $ 1,027,446       892,866  
Accounts Payable and Accrued Expenses
     335,877       273,756  
Current Portion Long-Term Debt
     4,853       14,979  
 
  
   
 
 
Total Current Liabilities
     1,368,176       1,181,601  
Long-Term Debt (a)
     753,134       651,176  
Other Long-Term Liabilities
     152,907       135,141  
Liabilities of Discontinued Operations
     7,595       17,954  
 
  
   
 
 
Total Liabilities
     2,281,812       1,985,872  
Stockholders’ Equity
     740,754       704,442  
 
  
   
 
 
Total Liabilities and Stockholders’ Equity
   $ 3,022,566     $ 2,690,314  
 
  
   
 

(a)   Undrawn capacity under the Company’s credit facilities amounted to approximately $311 million as of June 30, 2003.

 

 

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UNITED AUTO GROUP, INC.
Selected Data

                                       
          Second Quarter     Six Months  
         
   
 
          2003     2002     2003     2002  
         
   
   
   
 
Units
                                
 
New Retail Units
     44,993       40,116       83,357       74,107  
 
Used Retail Units
     23,803       19,447       45,097       36,064  
 
  
   
   
   
 
     
Total Retail Units
     68,796       59,563       128,454       110,171  
 
  
   
   
   
 
Same Store Retail Revenue
                                
 
New Vehicles
   $ 1,192,077     $ 1,093,769     $ 1,930,713     $ 1,815,794  
 
Used Vehicles
     443,889       379,610       580,323       529,612  
 
Finance and Insurance
     44,876       37,840       74,536       64,890  
 
Service and Parts
     205,918       188,387       327,322       306,615  
 
  
   
   
   
 
   
Total Same Store Retail Revenue
   $ 1,886,760     $ 1,699,606     $ 2,912,894     $ 2,716,911  
 
  
   
   
   
 
Same Store Retail Revenue Growth
                                
 
New Vehicles
     9.0 %     3.3 %     6.3 %     5.4 %
 
Used Vehicles
     16.9 %     (1.1 %)     9.6 %     0.1 %
 
Finance and Insurance
     18.6 %     6.9 %     14.9 %     9.9 %
 
Service and Parts
     9.3 %     5.8 %     6.8 %     6.2 %
Revenue Mix
                                
 
New Vehicles
     58.3 %     58.8 %     57.5 %     59.5 %
 
Used Vehicles
     21.7 %     20.5 %     22.1 %     19.7 %
 
Finance and Insurance
     2.4 %     2.4 %     2.4 %     2.4 %
 
Service and Parts
     10.2 %     10.2 %     10.5 %     10.3 %
 
Fleet
     1.7 %     1.5 %     1.6 %     1.7 %
 
Wholesale
     5.7 %     6.6 %     5.9 %     6.4 %
Retail Gross Margin — by Product
                                
 
New Vehicles
     8.4 %     8.6 %     8.4 %     8.6 %
 
Used Vehicles
     9.3 %     9.8 %     9.3 %     10.3 %
 
Finance and Insurance
     100.0 %     100.0 %     100.0 %     100.0 %
 
Service and Parts
     47.9 %     47.2 %     47.9 %     46.7 %
Gross Profit per Transaction
                                
 
New Vehicles
   $ 2,445     $ 2,380     $ 2,431     $ 2,367  
 
Used Vehicles
     1,894       1,959       1,904       1,940  
 
Finance and Insurance
     786       747       794       734  

 

 

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UNITED AUTO GROUP, INC.
Selected Data (Continued)

                                   
      Second Quarter     Six Months  
     
   
 
      2003     2002     2003     2002  
     
   
   
   
 
Brand Mix:
                                
 
Toyota/Lexus
     22 %     24 %     22 %     25 %
 
BMW
     13 %     11 %     13 %     9 %
 
Honda/Acura
     11 %     11 %     11 %     11 %
 
General Motors
     11 %     12 %     11 %     13 %
 
Mercedes
     9 %     9 %     9 %     8 %
 
Chrysler
     8 %     10 %     8 %     10 %
 
Nissan/Infiniti
     5 %     6 %     5 %     6 %
 
Ford
     4 %     5 %     4 %     5 %
 
Other
     17 %     12 %     17 %     13 %
Debt to Total Capital Ratio
     51 %     47 %     51 %     47 %
Adjusted EBITDA (a)
   $ 58,302     $ 54,699     $ 104,252     $ 92,799  

(a)   Adjusted EBITDA is defined as income from continuing operations before minority interests, income tax provision, other interest expense, depreciation and amortization. While Adjusted EBITDA should not be construed as a substitute for income from continuing operations or as a better measure of liquidity than cash flows from operating activities, which are determined in accordance with U.S. GAAP, it is included in this press release to provide additional information regarding the amount of cash our business is generating. This measure may not be comparable to similarly titled measures reported by other companies. Following is a reconciliation of income from continuing operations before minority interests and income tax provision and Adjusted EBITDA:
                                 
    Second Quarter     Six Months  
   
   
 
    2003     2002     2003     2002  
   
   
   
   
 
Income from continuing operations before minority interests and income tax provision
   $ 39.6     $ 38.9     $ 68.0     $ 64.8  
Other interest expense
     10.9       10.0       21.3       17.8  
Depreciation and amortization
     7.8       5.8       15.0       10.2  
 
  
   
   
   
 
Adjusted EBITDA
   $ 58.3     $ 54.7     $ 104.3     $ 92.8