EX-99.1 2 h29814exv99w1.htm PRESS RELEASE DATED NOVEMBER 1, 2005 exv99w1
 

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NEWS RELEASE
  950 Echo Lane, Suite 100 Houston, TX 77024
 
             
AT GROUP 1:
  President and CEO   Earl J. Hesterberg   (713) 647-5700
  SVP, CFO and Treasurer   Robert T. Ray   (713) 647-5700
  Manager, Investor Relations   Kim Paper Canning   (713) 647-5700
 
            
AT Fleishman-Hillard:
  Investors/Media   Russell A. Johnson   (713) 513-9515
 
FOR IMMEDIATE RELEASE
TUESDAY, NOV. 1, 2005
GROUP 1 AUTOMOTIVE REPORTS THIRD-QUARTER RESULTS
HOUSTON, Nov. 1, 2005 — Group 1 Automotive, Inc. (NYSE: GPI), a Fortune 500 specialty retailer, today reported third-quarter net income of $21.6 million, or $0.88 per diluted share, compared with a net loss of $9.6 million, or $0.42 per diluted share, in the third quarter of 2004.
Summary Results of Operations (Unaudited)
(In millions, except per share amounts)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2005     2004     2005     2004  
Revenues
   $ 1,570.2     $ 1,532.4     $ 4,544.2     $ 3,994.3  
Gross Profit
   $ 243.1     $ 229.9     $ 707.7     $ 611.8  
Income from Operations
   $ 47.3     $ 1.7     $ 127.3     $ 69.9  
Income before Cumulative Effect of a Change in Accounting Principle
   $ 21.6     $ (9.6 )   $ 54.1     $ 16.6  
Diluted Earnings per Share before Cumulative Effect of a Change in Accounting Principle
   $ 0.88     $ (0.42 )   $ 2.24     $ 0.71  
Third-Quarter Results
Total revenues for the third quarter increased 2.5 percent to $1.6 billion. Gross profit increased 5.8 percent from the prior-year period to $243.1 million, reflecting a 50 basis point increase in gross margin to 15.5 percent. Income from operations was $47.3 million in the third quarter, resulting in an operating margin of 3.0 percent.
On a same store basis, excluding the six New Orleans-area dealerships affected by Hurricane Katrina, revenues grew 1.6 percent. This increase was highlighted by increases in each of the company’s four businesses. Same store gross profit, excluding New Orleans, increased 5.0 percent, reflecting increases of 11.9 percent in total used vehicles, 6.3 percent in parts and service, 2.5 percent in new vehicles, and 2.0 percent in finance and insurance. Same store gross margin, excluding New Orleans, increased by 50 basis points to 15.6 percent. Excluding New Orleans, same store selling, general and administrative (SG&A) expenses as a percentage of gross profit declined by 490 basis points, reflecting both the above-noted increase in gross profit, as well as a

 

 

Group 1 Automotive, Inc.
reduction in SG&A expenses from 12.0 percent of revenues to 11.6 percent of revenues. Same store operating margin, excluding New Orleans, was 3.4 percent.
As noted above, the company reported third-quarter net income of $0.88 per diluted share, compared with a net loss of $0.42 per diluted share in the third quarter of 2004. These results include certain asset impairments and hurricane-related losses and charges, as described below.
During the third quarter, the company recorded approximately $0.10 per diluted share in asset impairments associated with the pending disposition of certain of the company’s dealership assets in California. In the third quarter of 2004, the company recorded a $1.26 per diluted share charge related to the impairment of goodwill at its Atlanta platform.
The company estimates that the total financial impact of Hurricanes Katrina and Rita in the third quarter was $0.22 per diluted share. This amount includes insurance deductibles, clean up and repair costs, asset impairments, other direct operating losses and the estimated impact of lost sales as a result of the storms at each of the company’s New Orleans, Beaumont, Texas, and Houston-area dealerships.
As previously announced, four of Group 1’s six New Orleans-area dealerships have resumed operations after being closed for approximately two weeks following Hurricane Katrina. Two dealerships remain closed. As a result of the damage sustained at one of these closed dealerships, the company has terminated its facility lease and is exploring alternatives for returning the dealership to full operation. Group 1’s two Beaumont dealerships have resumed operations after temporary closures due to Hurricane Rita.
“Despite the challenges of two hurricanes during the quarter, our profitability improved across the board. I am especially pleased with our gross profit increases in our used vehicle and parts and service operations,” said Earl J. Hesterberg, Group 1’s president and chief executive officer. “Our results were also impacted by the employee-pricing programs offered by some automobile manufacturers. Although this helped to boost new vehicle sales and reduce inventories in July and August, we have experienced a significant reduction in domestic-brand sales and traffic since early September. It now appears unlikely that overall industry sales levels will soon return to those seen in the summer months, and we remain cautious about the fourth quarter.”
Year-to-Date Results
For the first nine months of 2005, total revenues grew 13.8 percent to $4.5 billion. New vehicle revenues grew 13.9 percent and total used vehicle revenues grew 11.9 percent, while parts and service and finance and insurance revenues grew 19.0 percent and 10.1 percent, respectively. On a same store basis, again excluding the company’s New Orleans-area dealerships, revenues were up 2.2 percent from 2004. Same store operating margin, excluding New Orleans, was 3.0 percent.
Income before the cumulative effect of a change in accounting principle for the nine-month period was $54.1 million, or $2.24 per diluted share, compared with $16.6 million, or $0.71 per diluted share, in 2004. The 2005 results include the above-noted asset impairments and hurricane-related financial impact other than the impact of lost sales, as well as a $0.04 per diluted share charge related to compensation and other costs associated with the company’s CEO transition. The 2004 results included a $1.25 per diluted share charge related to the impairment of goodwill at the company’s Atlanta platform and a $0.17 per diluted share charge related to the March 2004 redemption of the company’s 10 7/8 percent senior subordinated notes.
Acquisition / Disposition Update
In August, Group 1 acquired Chrysler and Jeep franchises in Beaumont, Texas, to augment its existing autoplex dealership in that market. These two franchises are expected to generate $9.4 million in estimated annual revenues. Including this acquisition, the company has acquired seven franchises with total estimated annual

 

 

Group 1 Automotive, Inc.
revenues of $118.1 million during 2005. The company noted that it does not anticipate closing any additional acquisitions for the remainder of the year.
On Oct. 17, the company disposed of its Lincoln-Mercury dealership in Edmond, Okla. The dealership had 2004 revenues of approximately $21.8 million.
Company Strategy
Group 1 also announced several strategic initiatives it will pursue over the next year. These initiatives include expansion of used vehicle and parts and service sales, implementation of a used vehicle inventory management software system, rationalization of dealership management system suppliers from three to two, and implementation of a standard chart of accounts. To execute these initiatives and drive greater operational synergies and process consistency, Group 1’s field management structure is being revised from its current structure of 13 platform leaders to five regional vice presidents, who will report directly to Hesterberg. This change will take effect Jan. 1, 2006.
Additionally, Group 1 anticipates disposing of dealerships representing at least $120 million in annual revenues during the next 14 months and expects to return to an acquisition level of at least $300 million in estimated revenues per year beginning in 2006.
Finally, the company advised that it will target an annual earnings-per-share growth rate of at least 15 percent during the next three to five years.
Management’s Outlook
Group 1 reaffirmed its 2005 full-year earnings-per-share guidance of $2.75 to $2.80 provided by the company earlier this month. The guidance is based on weighted average diluted shares outstanding of 24.1 million. It excludes the impacts of any future acquisitions or dispositions and any cumulative effect of a change in accounting principle.
Third-Quarter Conference Call
Group 1 will hold a conference call to discuss its third-quarter results and company strategy today at 10 a.m. EST. The call will be simulcast live on the Internet at www.group1auto.com through the Investor Relations section. A replay will be available for 30 days.
A telephonic replay will be available following the call through Nov. 8, by dialing: 800-405-2236 (domestic) or 303-590-3000 (international), with passcode: 11041320#.
About Group 1 Automotive, Inc.
Group 1 owns 94 automotive dealerships comprised of 142 franchises, 32 brands and 30 collision service centers located in California, Colorado, Florida, Georgia, Louisiana, Massachusetts, New Hampshire, New Jersey, New Mexico, New York, Oklahoma and Texas. Through its dealerships and Internet sites, the company sells new and used cars and light trucks; arranges related financing, vehicle service and insurance contracts; provides maintenance and repair services; and sells replacement parts.
Group 1 Automotive can be reached on the Internet at www.group1auto.com.
    This press release and the attached schedules contain financial measures that have not been calculated in accordance with U.S. generally accepted accounting principles, or GAAP. As required by SEC rules, the company has provided in the attachments to this press release reconciliations of these measures to the most directly comparable GAAP measures.

 

 

Group 1 Automotive, Inc.
This press release contains “forward-looking statements,” which are statements related to future, not past events. In this context, the forward-looking statements often include statements regarding our goals, plans, projections and guidance regarding our financial position, results of operations, market position, pending and potential future acquisitions and business strategy, and often contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks” or “will.” Any such forward-looking statements are not assurances of future performance and involve risks and uncertainties that may cause results to differ materially from those set forth in the statements. These risks and uncertainties include, among other things, (a) general economic conditions, (b) the level of manufacturer incentives, (c) the future regulatory environment, (d) our ability to obtain an inventory of desirable new and used vehicles, (e) our relationship with our automobile manufacturers and the willingness of manufacturers to approve future acquisitions, (f) our cost of financing and the availability of credit for consumers, (g) our ability to complete acquisitions and the risks associated with acquisitions, and (h) our ability to retain key personnel. These factors, as well as additional factors that could affect our forward-looking statements, are described in our Form 10-K under the headings “Business—Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We urge you to carefully consider this information. We undertake no duty to update our forward-looking statements, including our earnings outlook.
FINANCIAL TABLES TO FOLLOW

 

 

Group 1 Automotive, Inc.
Consolidated Statements of Operations
(Unaudited)
(Dollars in thousands, except per share amounts)
                                                   
    Three Months Ended September 30,       Nine Months Ended September 30,  
    2005     2004     % Change       2005     2004     % Change  
REVENUES:
                                                  
New vehicle retail sales
   $ 977,492     $ 962,021       1.6 %     $ 2,791,812     $ 2,451,916       13.9 %
Used vehicle retail sales
     279,484       265,544       5.2         819,816       737,541       11.2  
Used vehicle wholesale sales
     98,439       101,551       (3.1 )       301,419       264,848       13.8  
Parts and service
     165,017       154,285       7.0         487,534       409,588       19.0  
Finance and insurance
     49,737       49,006       1.5         143,648       130,442       10.1  
 
                                      
Total revenues
     1,570,169       1,532,407       2.5 %       4,544,229       3,994,335       13.8 %
 
                                                  
COST OF SALES:
                                                  
New vehicle retail sales
     907,731       895,634       1.4 %       2,594,379       2,280,237       13.8 %
Used vehicle retail sales
     243,756       232,779       4.7         715,978       647,018       10.7  
Used vehicle wholesale sales
     100,248       104,132       (3.7 )       303,702       270,026       12.5  
Parts and service
     75,316       69,978       7.6         222,473       185,232       20.1  
 
                                      
Total cost of sales
     1,327,051       1,302,523       1.9 %       3,836,532       3,382,513       13.4 %
 
                                                  
GROSS PROFIT
     243,118       229,884       5.8 %       707,697       611,822       15.7 %
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
     186,216       182,682       1.9 %       560,853       489,309       14.6 %
 
                                                  
DEPRECIATION AND AMORTIZATION EXPENSE
     4,597       4,086       12.5 %       14,522       11,241       29.2 %
 
                                                  
IMPAIRMENT OF GOODWILL AND LONG-LIVED ASSETS
     4,987       41,373       (87.9) %       4,987       41,373       (87.9) %
 
                                      
 
                                                  
INCOME FROM OPERATIONS
     47,318       1,743       2,614.7 %       127,335       69,899       82.2 %
 
                                                  
OTHER INCOME (EXPENSE):
                                                  
Floorplan interest expense
     (9,259 )     (6,813 )     35.9 %       (27,998 )     (17,660 )     58.5 %
Other interest expense, net
     (4,344 )     (4,697 )     (7.5 )       (14,174 )     (13,627 )     4.0  
Loss on redemption of senior subordinated notes
     —       —       —         —       (6,381 )     (100.0 )
Other income (expense), net
     87       1       8,600.0         95       (63 )     (250.8 )
 
                                      
 
                                                  
INCOME (LOSS) BEFORE INCOME TAXES
     33,802       (9,766 )     (446.1) %       85,258       32,168       165.0 %
 
                                                  
PROVISION (BENEFIT) FOR INCOME TAXES
     12,176       (151 )     (8,163.6) %       31,143       15,582       99.9 %
 
                                      
 
                                                  
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE
     21,626       (9,615 )     (324.9 )       54,115       16,586       226.3  
 
                                                  
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE, NET OF TAX BENEFIT OF $10,231
     —       —       —         (16,038 )     —       —  
 
                                      
 
                                                  
NET INCOME (LOSS)
   $ 21,626     $ (9,615 )     (324.9) %     $ 38,077     $ 16,586       129.6 %
 
                                      
 
                                                  
DILUTED EARNINGS (LOSS) PER SHARE:
                                                  
Income (loss) before cumulative effect of a change in accounting principle
   $ 0.88     $ (0.42 )     (309.5) %     $ 2.24     $ 0.71       215.5 %
Cumulative effect of a change in accounting principle
     —       —       —         (0.66 )     —       —  
 
                                      
Net income (loss)
   $ 0.88     $ (0.42 )     (309.5) %     $ 1.58     $ 0.71       122.5 %
 
                                      
 
                                                  
Weighted average diluted shares outstanding
     24,570,979       22,946,245       7.1 %       24,149,585       23,427,035       3.1 %

 

 

Group 1 Automotive, Inc.
Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands)
                         
    September 30,     December 31,        
    2005     2004     % Change  
ASSETS:
                        
 
                        
CURRENT ASSETS:
                        
Cash and cash equivalents
   $ 33,528     $ 37,750       (11.2) %
Contracts in transit and vehicle receivables, net
     137,000       172,402       (20.5 )
Accounts and notes receivable, net
     89,114       76,687       16.2  
Inventories
     686,694       877,575       (21.8 )
Deferred income taxes
     17,691       14,755       19.9  
Prepaid expenses and other current assets
     17,395       26,046       (33.2 )
 
                  
Total current assets
     981,422       1,205,215       (18.6 )
PROPERTY AND EQUIPMENT, net
     176,033       160,297       9.8  
GOODWILL
     373,530       366,673       1.9  
INTANGIBLE FRANCHISE RIGHTS
     169,185       187,135       (9.6 )
OTHER ASSETS
     25,570       27,900       (8.4 )
 
                  
Total assets
   $ 1,725,740     $ 1,947,220       (11.4) %
 
                  
 
                        
LIABILITIES AND STOCKHOLDERS’ EQUITY:
                        
 
                        
CURRENT LIABILITIES:
                        
Floorplan notes payable
   $ 634,830     $ 848,260       (25.2) %
Acquisition line of credit
     25,000       —       N/A  
Current maturities of long-term debt
     948       1,054       (10.1 )
Accounts payable
     99,561       108,920       (8.6 )
Accrued expenses
     99,469       91,528       8.7  
 
                  
Total current liabilities
     859,808       1,049,762       (18.1 )
LONG-TERM DEBT, net of current maturities
     158,185       156,747       0.9  
ACQUISITION LINE
     —       84,000       (100.0 )
DEFERRED INCOME TAXES
     27,030       33,197       (18.6 )
OTHER LIABILITIES
     27,156       24,288       11.8  
 
                  
Total liabilities before deferred revenues
     1,072,179       1,347,994       (20.5 )
 
                  
 
                        
DEFERRED REVENUES
     27,040       32,052       (15.6 )
 
                        
STOCKHOLDERS’ EQUITY:
                        
Common stock
     244       239       2.1  
Additional paid-in capital
     273,112       265,645       2.8  
Retained earnings
     357,008       318,931       11.9  
Accumulated other comprehensive loss
     (218 )     (173 )     26.0  
Deferred stock-based compensation
     (3,625 )     —       N/A  
Treasury stock
     —       (17,468 )     (100.0 )
 
                  
Total stockholders’ equity
     626,521       567,174       10.5  
 
                  
Total liabilities and stockholders’ equity
   $ 1,725,740     $ 1,947,220       (11.4) %
 
                  
 
                        
BALANCE SHEET DATA:
                        
Working capital
   $ 121,614     $ 155,453       (21.8) %
Current ratio
     1.14       1.15       (0.9 )
 
                        
Long-term debt to capitalization
     20 %     30 %        
Inventory days supply: (1)
                        
New vehicle
     57       70       (18.6) %
Used vehicle
     28       29       (3.4 )
 
(1)   Inventory days supply equals units in inventory as of the end of the period, divided by unit sales for the month then ended, times 30 days.

 

 

Group 1 Automotive, Inc.
Additional Information — Consolidated
(Unaudited)
                                     
        Three Months Ended   Nine Months Ended
        September 30,   September 30,
        2005   2004   2005   2004
NEW VEHICLE UNIT SALES GEOGRAPHIC MIX:                                
Platform
   State(s)                                
Ira Motor Group
   Massachusetts     14.4 %     13.1 %     13.5 %     13.1 %
Houston Metro Platform
   Texas     14.1       13.7       14.5       14.5  
Bob Howard Auto Group
   Oklahoma     12.2       11.8       11.9       12.4  
Miller Automotive Group
   California     12.3       12.9       12.9       11.9  
Maxwell Automotive Group
   Texas     7.7       7.9       7.6       8.0  
West Central Platform
   TX, CO, NM     8.8       9.9       9.3       10.5  
Group 1 Florida
   Florida     6.4       5.5       6.1       6.2  
Bohn Automotive Group
   Louisiana     4.4       6.1       5.2       6.7  
Peterson Automotive Group
   California     4.5       5.3       4.3       2.6  
Group 1 Atlanta
   Georgia     5.3       4.7       4.9       5.3  
Courtesy Auto Group
   Texas     4.9       5.0       4.6       5.5  
David Michael Motor Group
   New Jersey     2.9       2.7       2.8       2.8  
Hassel Auto Group
   New York     2.1       1.4       2.4       0.5  
 
                                    
 
         100.0 %     100.0 %     100.0 %     100.0 %
 
                                    
NEW VEHICLE UNIT SALES BRAND MIX:                                
Toyota/Scion/Lexus
         28.6 %     27.7 %     28.6 %     27.5 %
Ford
         19.6       19.7       18.8       21.1  
DaimlerChrysler
         15.6       14.4       15.0       13.9  
Nissan/Infiniti
         10.7       10.8       11.2       10.7  
GM
         8.9       10.9       10.1       11.0  
Honda/Acura
         9.7       8.8       9.4       9.8  
Other
         6.9       7.7       6.9       6.0  
 
                                    
 
         100.0 %     100.0 %     100.0 %     100.0 %
 
                                    
NEW VEHICLE UNIT OTHER MIX:                                
Domestic
         39.2 %     40.0 %     38.5 %     41.9 %
Import
         45.8       46.2       46.1       45.4  
Luxury
         15.0       13.8       15.4       12.7  
 
                                    
 
         100.0 %     100.0 %     100.0 %     100.0 %
 
                                    
Car
         46.3 %     43.1 %     45.8 %     42.5 %
Truck
         53.7       56.9       54.2       57.5  
 
                                    
 
         100.0 %     100.0 %     100.0 %     100.0 %

 

 

Group 1 Automotive, Inc.
Additional Information — Consolidated
(Unaudited)
(Dollars in thousands, except per unit amounts)
                                                   
    Three Months Ended September 30,       Nine Months Ended September 30,  
    2005     2004     % Change       2005     2004     % Change  
REVENUES:
                                                  
New vehicle retail sales
   $ 977,492     $ 962,021       1.6 %     $ 2,791,812     $ 2,451,916       13.9 %
Used vehicle retail sales
     279,484       265,544       5.2         819,816       737,541       11.2  
Used vehicle wholesale sales
     98,439       101,551       (3.1 )       301,419       264,848       13.8  
 
                                      
Total used
     377,923       367,095       2.9         1,121,235       1,002,389       11.9  
Parts and service
     165,017       154,285       7.0         487,534       409,588       19.0  
Finance and insurance
     49,737       49,006       1.5         143,648       130,442       10.1  
 
                                      
Total
   $ 1,570,169     $ 1,532,407       2.5 %     $ 4,544,229     $ 3,994,335       13.8 %
 
                                                  
GROSS MARGIN:
                                                  
New vehicle retail sales
     7.1 %     6.9 %               7.1 %     7.0 %        
Used vehicle retail sales
     12.8       12.3                 12.7       12.3          
Used vehicle wholesale sales
     (1.8 )     (2.5 )               (0.8 )     (2.0 )        
 
                                      
Total used
     9.0       8.2                 9.1       8.5          
Parts and service
     54.4       54.6                 54.4       54.8          
Finance and insurance
     100.0       100.0                 100.0       100.0          
 
                                      
Total
     15.5 %     15.0 %               15.6 %     15.3 %        
 
                                                  
GROSS PROFIT (LOSS):
                                                  
New vehicle retail sales
   $ 69,761     $ 66,387       5.1 %     $ 197,433     $ 171,679       15.0 %
Used vehicle retail sales
     35,728       32,765       9.0         103,838       90,523       14.7  
Used vehicle wholesale sales
     (1,809 )     (2,581 )     29.9         (2,283 )     (5,178 )     55.9  
 
                                      
Total used
     33,919       30,184       12.4         101,555       85,345       19.0  
Parts and service
     89,701       84,307       6.4         265,061       224,356       18.1  
Finance and insurance
     49,737       49,006       1.5         143,648       130,442       10.1  
 
                                      
Total
   $ 243,118     $ 229,884       5.8 %     $ 707,697     $ 611,822       15.7 %
 
                                                  
UNITS SOLD:
                                                  
Retail new vehicles sold
     34,355       33,991       1.1 %       96,909       87,864       10.3 %
Retail used vehicles sold
     17,826       17,707       0.7         52,509       50,318       4.4  
Wholesale used vehicles sold
     13,832       13,831       0.0         39,520       36,515       8.2  
 
                                      
Total used
     31,658       31,538       0.4 %       92,029       86,833       6.0 %
 
                                                  
GROSS PROFIT (LOSS) PER UNIT SOLD:
                                                  
New vehicle retail sales
   $ 2,031     $ 1,953       4.0 %     $ 2,037     $ 1,954       4.2 %
Used vehicle retail sales
     2,004       1,850       8.3         1,978       1,799       9.9  
Used vehicle wholesale sales
     (131 )     (187 )     29.9         (58 )     (142 )     59.2  
Total used
     1,071       957       11.9         1,104       983       12.3  
Finance and insurance (per retail unit)
     953       948       0.5         961       944       1.8  
 
                                                  
OTHER:
                                                  
Adjusted used gross margin(1)
     12.1 %     11.4 %               12.4 %     11.6 %        
Adjusted used gross profit per retail unit(2)
   $ 1,903     $ 1,705       11.6 %     $ 1,934     $ 1,696       14.0 %
SG&A expenses
   $ 186,216     $ 182,682       1.9 %     $ 560,853     $ 489,309       14.6 %
SG&A as % revenues
     11.9 %     11.9 %               12.3 %     12.3 %        
SG&A as % gross profit
     76.6 %     79.5 %               79.3 %     80.0 %        
Operating margin
     3.0 %     0.1 %               2.8 %     1.7 %        
Pretax income margin
     2.2 %     (0.6) %               1.9 %     0.8 %        
Floorplan interest
   $ (9,259 )   $ (6,813 )     35.9 %     $ (27,998 )   $ (17,660 )     58.5 %
Floorplan assistance
     9,691       9,499       2.0         27,527       24,457       12.6  
 
                                      
Net floorplan benefit (expense)
   $ 432     $ 2,686       (83.9) %     $ (471 )   $ 6,797       (106.9) %
 
(1)   Adjusted used gross margin equals total used vehicle gross profit, which includes net wholesale loss, divided by used vehicle retail sales revenues. The profit or loss on wholesale sales is included in this number, as these transactions facilitate retail vehicle sales and are not expected to generate profit.
 
(2)   Adjusted used gross profit per retail unit equals total used vehicle gross profit, which includes net wholesale loss, divided by retail used vehicle unit sales. The profit or loss on wholesale sales is included in this number, as these transactions facilitate retail vehicle sales and are not expected to generate profit.

 

 

Group 1 Automotive, Inc.
Additional Information — Same Store(1)
(Unaudited)
(Dollars in thousands, except per unit amounts)
                                                                             
    Three Months Ended September 30, 2005       Three Months Ended September 30, 2004       Percentage Change  
                    Same Store                       Same Store                       Same Store  
                    excluding New                       excluding New       Same     New     excluding New  
    Same Store     New Orleans     Orleans       Same Store     New Orleans     Orleans       Store     Orleans     Orleans  
REVENUES:
                                                                            
New vehicle retail sales
   $ 952,583     $ 40,559     $ 912,024       $ 962,021     $ 54,875     $ 907,146         (1.0) %     (26.1) %     0.5 %
Used vehicle retail sales
     272,865       9,329       263,536         265,544       13,545       251,999         2.8       (31.1 )     4.6  
Used vehicle wholesale sales
     96,783       3,661       93,122         101,551       4,780       96,771         (4.7 )     (23.4 )     (3.8 )
 
                                                          
Total used
     369,648       12,990       356,658         367,095       18,325       348,770         0.7       (29.1 )     2.3  
Parts and service
     161,667       4,780       156,887         154,285       7,141       147,144         4.8       (33.1 )     6.6  
Finance and insurance
     49,272       2,119       47,153         49,006       2,768       46,238         0.5       (23.4 )     2.0  
 
                                                          
Total
   $ 1,533,170     $ 60,448     $ 1,472,722       $ 1,532,407     $ 83,109     $ 1,449,298         0.0 %     (27.3) %     1.6 %
 
                                                                            
GROSS MARGIN:
                                                                            
New vehicle retail sales
     7.1 %     5.8 %     7.2 %       6.9 %     4.8 %     7.0 %                          
Used vehicle retail sales
     12.8       13.8       12.8         12.3       12.8       12.3                            
Used vehicle wholesale sales
     (1.8 )     (0.2 )     (1.9 )       (2.5 )     (3.4 )     (2.5 )                          
 
                                            
Total used
     9.0       9.9       9.0         8.2       8.6       8.2                            
Parts and service
     54.3       55.5       54.3         54.6       59.5       54.4                            
Finance and insurance
     100.0       100.0       100.0         100.0       100.0       100.0                            
 
                                            
Total
     15.5 %     13.9 %     15.6 %       15.0 %     13.5 %     15.1 %                          
 
                                                                            
GROSS PROFIT (LOSS):
                                                                            
New vehicle retail sales
   $ 67,725     $ 2,336     $ 65,389       $ 66,387     $ 2,618     $ 63,769         2.0 %     (10.8) %     2.5 %
Used vehicle retail sales
     35,063       1,290       33,773         32,765       1,734       31,031         7.0       (25.6 )     8.8  
Used vehicle wholesale sales
     (1,759 )     (8 )     (1,751 )       (2,581 )     (162 )     (2,419 )       (31.8 )     (95.1 )     (27.6 )
 
                                                          
Total used
     33,304       1,282       32,022         30,184       1,572       28,612         10.3       (18.4 )     11.9  
Parts and service
     87,778       2,652       85,126         84,307       4,252       80,055         4.1       (37.6 )     6.3  
Finance and insurance
     49,272       2,119       47,153         49,006       2,768       46,238         0.5       (23.4 )     2.0  
 
                                                          
Total
   $ 238,079     $ 8,389     $ 229,690       $ 229,884     $ 11,210     $ 218,674         3.6 %     (25.2) %     5.0 %
 
                                                                            
UNITS SOLD:
                                                                            
Retail new vehicles sold
     33,643       1,492       32,151         33,991       2,058       31,933         (1.0) %     (27.5) %     0.7 %
Retail used vehicles sold
     17,490       686       16,804         17,707       1,002       16,705         (1.2 )     (31.5 )     0.6  
Wholesale used vehicles sold
     13,625       647       12,978         13,831       900       12,931         (1.5 )     (28.1 )     0.4  
 
                                                          
Total used
     31,115       1,333       29,782         31,538       1,902       29,636         (1.3) %     (29.9) %     0.5 %
 
                                                                            
GROSS PROFIT (LOSS) PER UNIT SOLD:
                                                                            
New vehicle retail sales
   $ 2,013     $ 1,566     $ 2,034       $ 1,953     $ 1,272     $ 1,997         3.1 %     23.1 %     1.9 %
Used vehicle retail sales
     2,005       1,880       2,010         1,850       1,731       1,858         8.4       8.6       8.2  
Used vehicle wholesale sales
     (129 )     (12 )     (135 )       (187 )     (180 )     (187 )       (31.0 )     (93.3 )     (27.8 )
Total used
     1,070       962       1,075         957       826       965         11.8       16.5       11.4  
Finance and insurance (per retail unit)
     964       973       963         948       905       951         1.7       7.5       1.3  
 
                                                                            
OTHER:
                                                                            
Adjusted used gross margin(2)
     12.2 %     13.7 %     12.2 %       11.4 %     11.6 %     11.4 %                          
Adjusted used gross profit per retail unit(3)
   $ 1,904     $ 1,869     $ 1,906       $ 1,705     $ 1,569     $ 1,713         11.7 %     19.1 %     11.3 %
SG&A expenses
   $ 182,346     $ 10,905     $ 171,441       $ 182,682     $ 8,923     $ 173,759         (0.2) %     22.2 %     (1.3) %
SG&A as % revenues
     11.9 %     18.0 %     11.6 %       11.9 %     10.7 %     12.0 %                          
SG&A as % gross profit
     76.6 %     130.0 %     74.6 %       79.5 %     79.6 %     79.5 %                          
Operating margin
     3.0 %     (6.8) %     3.4 %       0.1 %     2.4 %     0.0 %                          
Floorplan interest
   $ (9,010 )   $ (603 )   $ (8,407 )     $ (6,813 )   $ (379 )   $ (6,434 )       32.2 %     59.1 %     30.7 %
Floorplan assistance
     9,622       416       9,206         9,499       567       8,932         1.3       (26.6 )     3.1  
 
                                                          
Net floorplan benefit (expense)
   $ 612     $ (187 )   $ 799       $ 2,686     $ 188     $ 2,498         (77.2) %     (199.5) %     (68.0) %
 
(1)   Same store amounts include the results for the identical months in each period presented in the comparison commencing with the first month we owned the dealership and, in the case of dispositions, ending with the last month we owned it. Same store results also include the activities of the corporate office.
 
(2)   Adjusted used gross margin equals total used vehicle gross profit, which includes net wholesale loss, divided by used vehicle retail sales revenues. The profit or loss on wholesale sales is included in this number, as these transactions facilitate retail vehicle sales and are not expected to generate profit.
 
(3)   Adjusted used gross profit per retail unit equals total used vehicle gross profit, which includes net wholesale loss, divided by retail used vehicle unit sales. The profit or loss on wholesale sales is included in this number, as these transactions facilitate retail vehicle sales and are not expected to generate profit.

 

 

Group 1 Automotive, Inc.
Additional Information — Same Store(1)
(Unaudited)
(Dollars in thousands, except per unit amounts)
                                                                             
    Nine Months Ended September 30, 2005       Nine Months Ended September 30, 2004       Percentage Change  
                    Same Store                       Same Store                       Same Store  
                    excluding New                       excluding New       Same     New     excluding New  
    Same Store     New Orleans     Orleans       Same Store     New Orleans     Orleans       Store     Orleans     Orleans  
REVENUES:
                                                                            
New vehicle retail sales
   $ 2,468,519     $ 131,738     $ 2,336,781       $ 2,451,916     $ 154,593     $ 2,297,323         0.7 %     (14.8) %     1.7 %
Used vehicle retail sales
     744,430       37,921       706,509         737,541       42,085       695,456         0.9       (9.9 )     1.6  
Used vehicle wholesale sales
     271,292       13,839       257,453         264,848       13,653       251,195         2.4       1.4       2.5  
 
                                                          
Total used
     1,015,722       51,760       963,962         1,002,389       55,738       946,651         1.3       (7.1 )     1.8  
Parts and service
     428,878       18,392       410,486         409,588       20,542       389,046         4.7       (10.5 )     5.5  
Finance and insurance
     133,500       7,385       126,115         130,442       7,869       122,573         2.3       (6.2 )     2.9  
 
                                                          
Total
   $ 4,046,619     $ 209,275     $ 3,837,344       $ 3,994,335     $ 238,742     $ 3,755,593         1.3 %     (12.3) %     2.2 %
 
                                                                            
GROSS MARGIN:
                                                                            
New vehicle retail sales
     7.0 %     5.7 %     7.1 %       7.0 %     5.1 %     7.1 %                          
Used vehicle retail sales
     12.8       13.1       12.8         12.3       11.7       12.3                            
Used vehicle wholesale sales
     (0.8 )     (0.4 )     (0.9 )       (2.0 )     (3.1 )     (1.9 )                          
 
                                            
Total used
     9.1       9.5       9.1         8.5       8.1       8.5                            
Parts and service
     54.3       56.3       54.2         54.8       59.5       54.5                            
Finance and insurance
     100.0       100.0       100.0         100.0       100.0       100.0                            
 
                                            
Total
     15.6 %     14.4 %     15.7 %       15.3 %     13.6 %     15.4 %                          
 
                                                                            
GROSS PROFIT (LOSS):
                                                                            
New vehicle retail sales
   $ 172,892     $ 7,468     $ 165,424       $ 171,679     $ 7,866     $ 163,813         0.7 %     (5.1) %     1.0 %
Used vehicle retail sales
     95,104       4,958       90,146         90,523       4,934       85,589         5.1       0.5       5.3  
Used vehicle wholesale sales
     (2,290 )     (62 )     (2,228 )       (5,178 )     (421 )     (4,757 )       (55.8 )     (85.3 )     (53.2 )
 
                                                          
Total used
     92,814       4,896       87,918         85,345       4,513       80,832         8.8       8.5       8.8  
Parts and service
     232,749       10,357       222,392         224,356       12,215       212,141         3.7       (15.2 )     4.8  
Finance and insurance
     133,500       7,385       126,115         130,442       7,869       122,573         2.3       (6.2 )     2.9  
 
                                                          
Total
   $ 631,955     $ 30,106     $ 601,849       $ 611,822     $ 32,463     $ 579,359         3.3 %     (7.3) %     3.9 %
 
                                                                            
UNITS SOLD:
                                                                            
Retail new vehicles sold
     87,671       4,966       82,705         87,864       5,843       82,021         (0.2) %     (15.0) %     0.8 %
Retail used vehicles sold
     48,688       2,812       45,876         50,318       3,116       47,202         (3.2 )     (9.8 )     (2.8 )
Wholesale used vehicles sold
     36,503       2,342       34,161         36,515       2,527       33,988         (0.0 )     (7.3 )     0.5  
 
                                                          
Total used
     85,191       5,154       80,037         86,833       5,643       81,190         (1.9) %     (8.7) %     (1.4) %
 
                                                                            
GROSS PROFIT (LOSS) PER UNIT SOLD:
                                                                            
New vehicle retail sales
   $ 1,972     $ 1,504     $ 2,000       $ 1,954     $ 1,346     $ 1,997         0.9 %     11.7 %     0.2 %
Used vehicle retail sales
     1,953       1,763       1,965         1,799       1,583       1,813         8.6       11.4       8.4  
Used vehicle wholesale sales
     (63 )     (26 )     (65 )       (142 )     (167 )     (140 )       (55.6 )     (84.4 )     (53.6 )
Total used
     1,089       950       1,098         983       800       996         10.8       18.8       10.2  
Finance and insurance (per retail unit)
     979       949       981         944       878       949         3.7       8.1       3.4  
 
                                                                            
OTHER:
                                                                            
Adjusted used gross margin(2)
     12.5 %     12.9 %     12.4 %       11.6 %     10.7 %     11.6 %                          
Adjusted used gross profit per retail unit(3)
   $ 1,906     $ 1,741     $ 1,916       $ 1,696     $ 1,448     $ 1,712         12.4 %     20.2 %     11.9 %
SG&A expenses
   $ 499,708     $ 28,946     $ 470,762       $ 489,309     $ 26,216     $ 463,093         2.1 %     10.4 %     1.7 %
SG&A as % revenues
     12.3 %     13.8 %     12.3 %       12.3 %     11.0 %     12.3 %                          
SG&A as % gross profit
     79.1 %     96.1 %     78.2 %       80.0 %     80.8 %     79.9 %                          
Operating margin
     2.8 %     (0.5) %     3.0 %       1.7 %     2.3 %     1.7 %                          
Floorplan interest
   $ (25,007 )   $ (1,782 )   $ (23,225 )     $ (17,660 )   $ (1,106 )   $ (16,554 )       41.6 %     61.1 %     40.3 %
Floorplan assistance
     25,956       1,480       24,476         24,457       1,582       22,875         6.1       (6.4 )     7.0  
 
                                                          
Net floorplan benefit (expense)
   $ 949     $ (302 )   $ 1,251       $ 6,797     $ 476     $ 6,321         (86.0) %     (163.4) %     (80.2) %
 
(1)   Same store amounts include the results for the identical months in each period presented in the comparison commencing with the first month we owned the dealership and, in the case of dispositions, ending with the last month we owned it. Same store results also include the activities of the corporate office.
 
(2)   Adjusted used gross margin equals total used vehicle gross profit, which includes net wholesale loss, divided by used vehicle retail sales revenues. The profit or loss on wholesale sales is included in this number, as these transactions facilitate retail vehicle sales and are not expected to generate profit.
 
(3)   Adjusted used gross profit per retail unit equals total used vehicle gross profit, which includes net wholesale loss, divided by retail used vehicle unit sales. The profit or loss on wholesale sales is included in this number, as these transactions facilitate retail vehicle sales and are not expected to generate profit.