EX-99.1 2 h67454exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
     
NEWS RELEASE
  (GROUP 1 AUTOMOTIVE LOGO)
    800 Gessner • Suite 500 • Houston, TX 77024
             
 
AT GROUP 1:
  President and CEO   Earl J. Hesterberg   (713) 647-5700
 
  Senior Vice President and CFO   John C. Rickel   (713) 647-5700
 
  Manager, Investor Relations   Kim Paper Canning   (713) 647-5700
AT Fleishman-Hillard:
  Investors   John Roper   (713) 513-9505
AT Pierpont Communications:
  Media   Clint L. Woods   (713) 627-2223
 
FOR IMMEDIATE RELEASE
TUESDAY, JULY 28, 2009
GROUP 1 AUTOMOTIVE REPORTS BETTER-THAN-EXPECTED 2009 SECOND-QUARTER EARNINGS
Company Reinstates Full-Year Guidance
HOUSTON, July 28, 2009 — Group 1 Automotive, Inc. (NYSE: GPI), a Fortune 500 automotive retailer, today reported second-quarter adjusted net income from continuing operations of $10.3 million, or $0.44 per diluted share, for the period ended June 30, 2009, as compared to the 2008 results of $17.8 million, or $0.79 per diluted share. For comparison purposes, as shown in the attached reconciliation table, the 2009 second-quarter results included after-tax charges of $0.2 million, or $0.01 per diluted share, for a non-cash impairment charge for a property related to a domestic manufacturer; pre-payment charges on independent mortgage agreements that were rolled into the existing syndicated mortgage facility; and, gains on a dealership disposition and debt redemptions. The 2008 second-quarter results included lease termination after-tax charges of $0.5 million, or $0.02 per diluted share. Including the charges, net income from continuing operations was $10.1 million, or $0.43 per diluted share, for the quarter ended June 30, 2009.
Second-Quarter Operating Highlights
•   Same-store new vehicle margins expanded 40 basis points from first-quarter, to 5.8 percent, as lower inventory levels across the industry begin to reduce selling pressure.
•   Same-store gross margin improved 130 basis points, to 17.2 percent, from second quarter 2008. The gross margin improvement was attributed to improved total used vehicle margins, as well as a favorable mix shift to the higher-margin parts and service business from the lower-margin new vehicle business.
•   Group 1’s same-store parts and service business held relatively stable, with a gross margin of 52.6 percent on 3.7 percent lower sales.
•   On a consolidated basis, selling, general and administrative (SG&A) expenses were reduced $44.2 million in the quarter, bringing the total expense reduction to $86.1 million this year.
•   New vehicle inventory was reduced by $110 million, to $374 million, bringing inventory down to a 55 days’ supply.
“In addition to the stable profitability of Group 1’s parts and service business, the cost cutting measures we completed in the first quarter coupled with our ongoing inventory management efforts delivered better-than-anticipated results in the second quarter,” said Earl J. Hesterberg, Group 1’s president and chief executive officer. “Group 1’s operating team has been working diligently to reduce expenses and new vehicle inventories, resulting in more-streamlined operations that run profitably at current selling rates.”

 

 

Group 1 Automotive, Inc.
Corporate Development Update
Group 1 previously announced that it augmented its Houston portfolio by acquiring a Hyundai franchise in April with estimated annual revenues of approximately $36.7 million.
Group 1 also previously announced that it sold a Ford dealership in March with trailing-12-month revenues of $38.9 million. Subsequently, in June, Group 1 terminated a Volvo franchise in New York with trailing-12-month revenues of $25.3 million.
Group 1’s Balance Sheet Strengthened
Group 1 announced that it has remained in compliance with all of its debt covenants as of June 30.
Group 1 reported it reduced its new vehicle inventory during the quarter by $109.7 million, to $374.4 million as of June 30. In addition, the company reduced non-floor plan debt by an additional $41.3 million during the quarter, reflecting primarily the repurchase of $6.7 million of its 2.25 percent convertible bonds, paying down its acquisition line by $30.0 million and reducing its mortgage debt by $4.7 million. The company ended the quarter with overall available liquidity of $172.7 million.
“The combination of improving operating performance and significant reductions in debt continues to strengthen the balance sheet and ensure strong compliance with our debt covenants,” said John C. Rickel, Group 1’s senior vice president and chief financial officer.
2009 Full-Year Guidance
Group 1 believes that the automotive retail market has stabilized and is, therefore, reinstating 2009 full-year earnings guidance with a range of $1.25 to $1.35 per diluted share under the following assumptions:
  •   Industry seasonally adjusted annual sales rate (SAAR) of 10.0 million vehicles
 
  •   SG&A expenses as a percent of gross profit at 80 percent to 83.5 percent, excluding any one-time items, as lower sales revenues are expected to offset cost improvements
 
  •   Total year-over-year reduction in SG&A expenses of $120 million at a 10 million SAAR level
 
  •   Tax rate of 40.0 percent
 
  •   Estimated average diluted shares outstanding of 23.2 million
 
  •   Capital expenditures of $25 million or less
 
  •   Guidance includes the impact of APB 14-1 and excludes the impact of future acquisitions and dispositions, as well as potential related exit costs
     On a same-store basis:
  •   Retail vehicle margins consistent with six-month 2009 levels
 
  •   Parts and service revenues 3 percent to 5 percent lower
 
  •   Finance and insurance gross profit at $950 to $975 per retail unit
Second-Quarter Earnings Conference Call
Group 1’s senior management will host a conference call today at 10 a.m. ET to discuss the second-quarter financial results and the company’s 2009 outlook and strategy.
The conference 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.
The conference call will also be available live by dialing in 10 minutes prior to the start of the call at:

 

 

Group 1 Automotive, Inc.
Domestic: 877-419-6596
International: 719-325-4862
Confirmation code: 8665542
A telephonic replay will be available following the call through Aug. 7 by dialing:
Domestic: 888-203-1112
International: 719-457-0820
Confirmation code: 8665542
About Group 1 Automotive, Inc.
Group 1 owns and operates 98 automotive dealerships, 132 franchises, and 24 collision service centers in the United States and the United Kingdom that offer 31 brands of automobiles. Through its dealerships, 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 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 and business 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 dispositions and the risks associated therewith, (h) foreign exchange controls and currency fluctuations, and (i) 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)
(In thousands, except per share amounts)
                                                   
    Three Months Ended June 30,       Six Months Ended June 30,  
    2009     2008     % Change       2009     2008     % Change  
REVENUES:
                                                  
New vehicle retail sales
   $ 608,592     $ 971,281       (37.3 )%     $ 1,155,884     $ 1,860,062       (37.9 )%
Used vehicle retail sales
     249,770       298,593       (16.4 )       474,629       602,588       (21.2 )
Used vehicle wholesale sales
     34,649       67,496       (48.7 )       69,385       134,723       (48.5 )
Parts and service
     183,105       192,753       (5.0 )       363,970       383,589       (5.1 )
Finance and insurance
     32,639       52,992       (38.4 )       64,704       105,415       (38.6 )
 
                                      
Total revenues
     1,108,755       1,583,115       (30.0 )%       2,128,572       3,086,377       (31.0 )%
 
                                                  
COST OF SALES:
                                                  
New vehicle retail sales
     573,612       908,262       (36.8 )%       1,091,430       1,739,899       (37.3 )%
Used vehicle retail sales
     223,942       266,192       (15.9 )       424,195       536,605       (20.9 )
Used vehicle wholesale sales
     33,541       68,290       (50.9 )       67,333       135,458       (50.3 )
Parts and service
     86,545       88,960       (2.7 )       171,845       175,426       (2.0 )
 
                                      
Total cost of sales
     917,640       1,331,704       (31.1 )%       1,754,803       2,587,388       (32.2 )%
 
                                                  
 
                                      
GROSS PROFIT
     191,115       251,411       (24.0 )%       373,769       498,989       (25.1 )%
 
                                                  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
     151,113       195,337       (22.6 )       304,347       390,399       (22.0 )
DEPRECIATION AND AMORTIZATION EXPENSE
     6,462       6,497       (0.5 )       12,875       12,314       4.6  
ASSET IMPAIRMENTS
     2,040       —       100.0         2,135       —       100.0  
 
                                      
OPERATING INCOME
     31,500       49,577       (36.5 )%       54,412       96,276       (43.5 )%
 
                                                  
OTHER INCOME (EXPENSE):
                                                  
Floorplan interest expense
     (7,857 )     (12,392 )     (36.6 )       (16,819 )     (24,400 )     (31.1 )
 
                                                  
Other interest expense, net
     (6,136 )     (7,065 )     (13.1 )       (11,598 )     (14,904 )     (22.2 )
 
                                                  
Gain on redemption of long-term debt
     2,102       —       100.0         18,090       —       100.0  
 
                                                  
Other income, net
     (5 )     (36 )     (86.1 )       (2 )     723       (100.3 )
 
                                                  
 
                                      
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND ADOPTION OF APB 14-1
     19,604       30,084       (34.8 )%       44,083       57,695       (23.6 )%
 
                                                  
PROVISION FOR INCOME TAXES
     (7,445 )     (11,591 )     (35.8 )       (17,201 )     (22,101 )     (22.2 )
 
                                                  
 
                                      
INCOME FROM CONTINUING OPERATIONS BEFORE ADOPTION OF APB 14-1
     12,159       18,493       (34.3 )%       26,882       35,594       (24.5 )%
 
                                                  
ADOPTION OF APB 14-1:
                                                  
Adjustment to gain on redemption of convertible notes
     (1,870 )     —       100.0         (10,477 )     —       100.0  
Amortization of convertible notes discount
     (1,440 )     (1,951 )     (26.2 )       (2,941 )     (3,875 )     (24.1 )
Income tax benefit related to adoption of APB 14-1
     1,233       737       67.3         4,993       1,465       240.8  
 
                                      
LOSS RELATED TO ADOPTION OF APB 14-1
     (2,077 )     (1,214 )     71.1         (8,245 )     (2,410 )     249.6  
 
                                                  
 
                                      
INCOME FROM CONTINUING OPERATIONS
     10,082       17,279       (41.7 )%       18,457       33,184       (44.4 )%
 
                                                  
DISCONTINUED OPERATIONS:
                                                  
Loss related to discontinued operations
     —       (2,367 )     (100.0 )       —       (3,481 )     (100.0 )
Income tax benefit related to loss on discontinued operations
     —       1,091       (100.0 )       —       1,478       (100.0 )
 
                                      
LOSS RELATED TO DISCONTINUED OPERATIONS
     —       (1,276 )     (100.0 )%       —       (2,003 )     (100.0 )%
 
                                                  
 
                                      
NET INCOME
   $ 10,082     $ 16,003       (37.0 )%     $ 18,457     $ 31,181       (40.8 )%
 
                                      
 
                                                  
DILUTED INCOME PER SHARE:
                                                  
Income per share from continuing operations before adoption of APB 14-1
   $ 0.52     $ 0.82       (36.6 )%     $ 1.16     $ 1.57       (26.1 )%
Loss per share related to adoption of APB 14-1
     (0.09 )     (0.05 )     80.0         (0.36 )     (0.11 )     218.2  
 
                                      
Income per share from continuing operations
     0.43       0.77       (44.2 )       0.80       1.46       (45.2 )
Loss per share related to discontinued operations
     —       (0.06 )     (100.0 )       —       (0.09 )     (100.0 )
 
                                      
Income per share
   $ 0.43     $ 0.71       (39.4 )%     $ 0.80     $ 1.37       (41.6 )%
 
                                      
 
                                                  
Weighted average diluted shares outstanding
     23,288       22,661       2.8 %       23,107       22,728       1.7 %

 

 

Group 1 Automotive, Inc.
Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands)
                         
    June 30,     December 31,        
    2009     2008     % Change  
 
                        
ASSETS:
                        
 
                        
CURRENT ASSETS:
                        
Cash and cash equivalents
   $ 22,527     $ 23,144       (2.7 )%
Contracts in transit and vehicle receivables, net
     78,881       102,834       (23.3 )
Accounts and notes receivable, net
     59,513       67,350       (11.6 )
Inventories
     541,213       845,944       (36.0 )
Deferred income taxes
     15,129       18,474       (18.1 )
Prepaid expenses and other current assets
     39,016       38,878       0.4  
 
                  
Total current assets
     756,279       1,096,624       (31.0 )
PROPERTY AND EQUIPMENT, net
     498,486       514,891       (3.2 )
GOODWILL AND OTHER INTANGIBLES
     656,319       655,784       0.1  
OTHER ASSETS
     18,657       20,815       (10.4 )
 
                  
Total assets
   $ 1,929,741     $ 2,288,114       (15.7 )%
 
                  
 
                        
LIABILITIES AND STOCKHOLDERS’ EQUITY:
                        
 
                        
CURRENT LIABILITIES:
                        
Floorplan notes payable — credit facility
   $ 458,247     $ 738,551       (38.0 )%
Offset account related to floorplan notes payable — credit facility
     (44,235 )     (44,859 )     (1.4 )
Floorplan notes payable — manufacturer affiliates
     85,481       128,580       (33.5 )
Current maturities of long-term debt
     13,197       13,594       (2.9 )
Accounts payable
     70,533       74,235       (5.0 )
Accrued expenses
     85,918       94,395       (9.0 )
 
                  
Total current liabilities
     669,141       1,004,496       (33.4 )
2.25% CONVERTIBLE SENIOR NOTES (aggregate principal of $187,753 and $224,500, respectively)
     132,848       155,333       (14.5 )
8.25% SENIOR SUBORDINATED NOTES
     73,112       72,962       0.2  
MORTGAGE FACILITY, net of current maturities
     180,665       168,583       7.2  
OTHER REAL ESTATE RELATED AND LONG-TERM DEBT,
                        
net of current maturities
     20,900       50,444       (58.6 )
CAPITAL LEASE OBLIGATIONS RELATED TO REAL ESTATE,
                        
net of current maturities
     38,558       39,401       (2.1 )
ACQUISITION LINE
     30,000       50,000       (40.0 )
DEFERRED INCOME TAXES
     17,075       2,768       516.9  
LIABILITIES FROM INTEREST RATE RISK MANAGEMENT ACTIVITIES
     37,479       44,655       (16.1 )
OTHER LIABILITIES
     27,080       27,135       (0.2 )
 
                  
Total liabilities before deferred revenues
     1,226,858       1,615,777       (24.1 )
 
                  
 
                        
DEFERRED REVENUES
     7,656       10,220       (25.1 )
 
                        
STOCKHOLDERS’ EQUITY:
                        
Common stock
     261       261       —  
Additional paid-in capital
     348,592       351,405       (0.8 )
Retained earnings
     455,544       437,087       4.2  
Accumulated other comprehensive loss
     (29,606 )     (38,109 )     (22.3 )
Treasury stock
     (79,564 )     (88,527 )     (10.1 )
 
                  
Total stockholders’ equity
     695,227       662,117       5.0  
 
                  
Total liabilities and stockholders’ equity
   $ 1,929,741     $ 2,288,114       (15.7 )%
 
                  
 
                        
KEY DEBT COVENANT METRICS: *
                        
Senior secured leverage ratio (must be less than 2.75)
     1.40       1.49          
Total leverage ratio (must be less than 4.50)
     3.26       3.46          
Fixed charge coverage ratio (must be greater than 1.25)
     1.72       1.59          
Current ratio (must be greater than 1.15)
     1.26       1.18          
 
*   Refer to website, www.group1auto.com, for debt covenant calculation definitions.

 

 

Group 1 Automotive, Inc.
Additional Information — Consolidated
(Unaudited)
                                     
        Three Months Ended,   Six Months Ended,
        June 30,   June 30,
        2009   2008   2009   2008
NEW VEHICLE UNIT SALES GEOGRAPHIC MIX:                                
Region
   Geographic Market                                
Eastern
   Massachusetts     14.6 %     11.8 %     14.2 %     11.7 %
 
   New Jersey     6.7       7.1       6.9       6.8  
 
   New York     4.6       4.3       4.4       4.2  
 
   New Hampshire     3.9       3.7       3.8       3.5  
 
   Georgia     3.7       3.3       3.7       3.4  
 
   Louisiana     3.0       3.1       3.2       3.4  
 
   Florida     1.6       2.3       1.8       2.6  
 
   Mississippi     1.8       1.7       1.7       1.6  
 
   Maryland     1.0       0.6       1.0       0.3  
 
   Alabama     0.6       0.9       0.6       0.9  
 
   South Carolina     0.3       0.3       0.3       0.3  
 
                                    
 
         41.8       39.1       41.6       38.7  
 
                                    
Central
   Texas     33.1       32.2       32.5       32.6  
 
   Oklahoma     8.8       9.6       8.5       9.4  
 
   Kansas     1.3       1.4       1.2       1.3  
 
                                    
 
         43.2       43.2       42.2       43.3  
 
                                    
Western
   California     12.7       16.0       14.1       16.3  
 
                                    
International
   United Kingdom     2.3       1.7       2.1       1.7  
 
                                    
 
         100.0 %     100.0 %     100.0 %     100.0 %
 
                                    
NEW VEHICLE UNIT SALES BRAND MIX:                                
Toyota/Scion/Lexus
         34.3 %     35.5 %     34.7 %     35.2 %
Honda/Acura
         13.5       14.9       13.6       14.0  
Nissan/Infiniti
         12.6       12.7       12.1       12.9  
BMW/Mini
         10.3       8.9       9.7       8.2  
Ford
         8.9       8.7       9.1       9.7  
Chrysler
         6.2       5.7       6.5       6.3  
Mercedes-Benz
         5.4       5.7       5.8       5.6  
GM
         3.8       4.5       3.9       4.7  
Other
         5.0       3.4       4.6       3.4  
 
                                    
 
         100.0 %     100.0 %     100.0 %     100.0 %
 
                                    
NEW VEHICLE UNIT OTHER MIX:                                
Import
         56.3 %     58.0 %     55.9 %     56.8 %
Luxury
         26.0       24.3       25.7       23.8  
Domestic
         17.7       17.7       18.4       19.4  
 
                                    
 
         100.0 %     100.0 %     100.0 %     100.00 %
 
                                    
Car
         58.0 %     61.8 %     57.0 %     58.7 %
Truck
         42.0       38.2       43.0       41.3  
 
                                    
 
         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 June 30,       Six Months Ended June 30,  
    2009     2008     % Change       2009     2008     % Change  
REVENUES:
                                                  
New vehicle retail sales
   $ 608,592     $ 971,281       (37.3 )%     $ 1,155,884     $ 1,860,062       (37.9 )%
 
                                                  
Used vehicle retail sales
     249,770       298,593       (16.4 )       474,629       602,588       (21.2 )
Used vehicle wholesale sales
     34,649       67,496       (48.7 )       69,385       134,723       (48.5 )
 
                                          
Total used
     284,419       366,089       (22.3 )       544,014       737,311       (26.2 )
Parts and service
     183,105       192,753       (5.0 )       363,970       383,589       (5.1 )
Finance and insurance
     32,639       52,992       (38.4 )       64,704       105,415       (38.6 )
 
                                          
Total
   $ 1,108,755     $ 1,583,115       (30.0 )%     $ 2,128,572     $ 3,086,377       (31.0 )%
 
                                                  
GROSS MARGIN:
                                                  
New vehicle retail sales
     5.7 %     6.5 %               5.6 %     6.5 %        
 
                                                  
Used vehicle retail sales
     10.3       10.9                 10.6       10.9          
Used vehicle wholesale sales
     3.2       (1.2 )               3.0       (0.5 )        
Total used
     9.5       8.6                 9.6       8.8          
Parts and service
     52.7       53.8                 52.8       54.3          
Finance and insurance
     100.0       100.0                 100.0       100.0          
Total
     17.2 %     15.9 %               17.6 %     16.2 %        
 
                                                  
GROSS PROFIT:
                                                  
New vehicle retail sales
   $ 34,980     $ 63,019       (44.5 )%     $ 64,454     $ 120,163       (46.4 )%
 
                                                  
Used vehicle retail sales
     25,828       32,401       (20.3 )       50,434       65,983       (23.6 )
Used vehicle wholesale sales
     1,108       (794 )     239.5         2,052       (735 )     379.2  
 
                                          
Total used
     26,936       31,607       (14.8 )       52,486       65,248       (19.6 )
Parts and service
     96,560       103,793       (7.0 )       192,125       208,163       (7.7 )
Finance and insurance
     32,639       52,992       (38.4 )       64,704       105,415       (38.6 )
 
                                          
Total
   $ 191,115     $ 251,411       (24.0 )%     $ 373,769     $ 498,989       (25.1 )%
 
                                                  
UNITS SOLD:
                                                  
Retail new vehicles sold
     19,954       32,368       (38.4 )%       37,885       60,887       (37.8 )%
 
                                                  
Retail used vehicles sold
     13,914       16,783       (17.1 )       27,006       33,888       (20.3 )
Wholesale used vehicles sold
     6,426       10,304       (37.6 )       12,855       20,252       (36.5 )
 
                                          
 
                                                  
Total used
     20,340       27,087       (24.9 )%       39,861       54,140       (26.4 )%
 
                                                  
GROSS PROFIT PER UNIT SOLD:
                                                  
New vehicle retail sales
   $ 1,753     $ 1,947       (10.0 )%     $ 1,701     $ 1,974       (13.8 )%
 
                                                  
Used vehicle retail sales
     1,856       1,931       (3.9 )       1,868       1,947       (4.1 )
Used vehicle wholesale sales
     172       (77 )     323.4         160       (36 )     544.4  
Total used
     1,324       1,167       13.5         1,317       1,205       9.3  
Finance and insurance (per retail unit)
   $ 964     $ 1,078       (10.6 )%     $ 997     $ 1,112       (10.3 )%
 
                                                  
OTHER:
                                                  
SG&A expenses
   $ 151,113     $ 195,337       (22.6 )%     $ 304,347     $ 390,399       (22.0 )%
SG&A as % revenues
     13.6 %     12.3 %               14.3 %     12.6 %        
SG&A as % gross profit
     79.1 %     77.7 %               81.4 %     78.2 %        
Operating margin
     2.8 %     3.1 %               2.6 %     3.1 %        
Pretax margin
     1.8 %     1.9 %               2.1 %     1.9 %        
 
                                                  
Floorplan interest
   $ (7,857 )   $ (12,392 )     (36.6 )%     $ (16,819 )   $ (24,400 )     (31.1 )%
Floorplan assistance
     4,725       7,839       (39.7 )       9,259       15,565       (40.5 )
 
                                          
Net floorplan expense
   $ (3,132 )   $ (4,553 )     (31.2 )%     $ (7,560 )   $ (8,835 )     (14.4 )%

 

 

Group 1 Automotive, Inc.
Additional Information — Same Store(1)
(Unaudited)
(Dollars in thousands, except per unit amounts)
                                                   
    Three Months Ended June 30,       Six Months Ended June 30,  
    2009     2008     % Change       2009     2008     % Change  
REVENUES:
                                                  
New vehicle retail sales
   $ 602,897     $ 954,220       (36.8 )%     $ 1,143,572     $ 1,834,094       (37.6 )%
 
                                                  
Used vehicle retail sales
     247,301       292,781       (15.5 )       468,250       593,534       (21.1 )
Used vehicle wholesale sales
     34,207       66,167       (48.3 )       68,425       132,683       (48.4 )
 
                                          
Total used
     281,508       358,948       (21.6 )       536,675       726,217       (26.1 )
Parts and service
     181,333       188,353       (3.7 )       359,149       376,624       (4.6 )
Finance and insurance
     32,553       52,430       (37.9 )       64,299       104,501       (38.5 )
 
                                          
Total
   $ 1,098,291     $ 1,553,951       (29.3 )%     $ 2,103,695     $ 3,041,436       (30.8 )%
 
                                                  
GROSS MARGIN:
                                                  
New vehicle retail sales
     5.8 %     6.5 %               5.6 %     6.5 %        
 
                                                  
Used vehicle retail sales
     10.3       10.8                 10.6       10.9          
Used vehicle wholesale sales
     3.1       (0.9 )               3.0       (0.4 )        
Total used
     9.5       8.7                 9.6       8.9          
Parts and service
     52.6       53.8                 52.7       54.2          
Finance and insurance
     100.0       100.0                 100.0       100.0          
Total
     17.2 %     15.9 %               17.6 %     16.2 %        
 
                                                  
GROSS PROFIT:
                                                  
New vehicle retail sales
   $ 34,722     $ 61,803       (43.8 )%     $ 63,952     $ 118,555       (46.1 )%
 
                                                  
Used vehicle retail sales
     25,560       31,756       (19.5 )       49,751       64,910       (23.4 )
Used vehicle wholesale sales
     1,062       (573 )     285.3         2,037       (494 )     512.3  
 
                                          
Total used
     26,622       31,183       (14.6 )       51,788       64,416       (19.6 )
Parts and service
     95,467       101,342       (5.8 )       189,390       204,254       (7.3 )
Finance and insurance
     32,553       52,430       (37.9 )       64,299       104,501       (38.5 )
 
                                          
Total
   $ 189,364     $ 246,758       (23.3 )%     $ 369,429     $ 491,726       (24.9 )%
 
                                                  
UNITS SOLD:
                                                  
Retail new vehicles sold
     19,807       31,825       (37.8 )%       37,551       60,049       (37.5 )%
 
                                                  
Retail used vehicles sold
     13,826       16,437       (15.9 )       26,760       33,338       (19.7 )
Wholesale used vehicles sold
     6,375       10,125       (37.0 )       12,737       19,940       (36.1 )
 
                                          
 
                                                  
Total used
     20,201       26,562       (23.9 )%       39,497       53,278       (25.9 )%
 
                                                  
GROSS PROFIT PER UNIT SOLD:
                                                  
New vehicle retail sales
   $ 1,753     $ 1,942       (9.7 )%     $ 1,703     $ 1,974       (13.7 )%
 
                                                  
Used vehicle retail sales
     1,849       1,932       (4.3 )       1,859       1,947       (4.5 )
Used vehicle wholesale sales
     167       (57 )     393.0         160       (25 )     740.0  
Total used
     1,318       1,174       12.3         1,311       1,209       8.4  
Finance and insurance (per retail unit)
   $ 968     $ 1,086       (10.9 )%     $ 1,000     $ 1,119       (10.6 )%
 
                                                  
OTHER:
                                                  
SG&A expenses
   $ 150,482     $ 190,620       (21.1 )%     $ 300,728     $ 382,844       (21.4 )%
SG&A as % revenues
     13.7 %     12.3 %               14.3 %     12.6 %        
SG&A as % gross profit
     79.5 %     77.2 %               81.4 %     77.9 %        
Operating margin
     3.0 %     3.2 %               2.7 %     3.2 %        
 
                                                  
Floorplan interest
   $ (7,816 )   $ (12,153 )     (35.7 )%     $ (16,731 )   $ (24,020 )     (30.3 )%
Floorplan assistance
     4,724       7,669       (38.4 )       9,240       15,307       (39.6 )
 
                                          
Net floorplan expense
   $ (3,092 )   $ (4,484 )     (31.0 )%     $ (7,491 )   $ (8,713 )     (14.0 )%
 
(1)   Same store amounts include the results for the identical months in each period presented in the comparison, commencing with the first full month we owned the dealership and, in the case of dispositions, ending with the last full month we owned it. Same store results also include the activities of our corporate office.

 

 

Group 1 Automotive, Inc.
Reconciliation of Certain Non-GAAP Financial Measures
(Unaudited)
(Dollars in thousands, except per share amounts)
NET INCOME FROM CONTINUING OPERATIONS RECONCILIATION:
                                                   
    Three Months Ended June 30,       Six Months Ended June 30,  
    2009     2008     % Change       2009     2008     % Change  
Reported net income from continuing operations
   $ 10,082     $ 17,279       (41.7) %     $ 18,457     $ 33,184       (44.4) %
Adjustments:
                                                  
Non-Cash asset impairments charges
     1,265       —                 1,265       —          
Mortgage debt refinance charges
     331       —                 331       —          
Gain on dealership disposition
     (902 )     —                 (451 )     —          
Gain on debt redemption
     (475 )     —                 (4,906 )     —          
Lease termination charges
     —       535                 —       535          
 
                                          
Adjusted net income from continuing operations (1)
   $ 10,301     $ 17,814       (42.2) %     $ 14,696     $ 33,719       (56.4) %
DILUTED INCOME PER SHARE FROM CONTINUING OPERATIONS RECONCILIATION:
                                                   
    Three Months Ended June 30,       Six Months Ended June 30,  
    2009     2008     % Change       2009     2008     % Change  
Reported income per share from continuing operations
   $ 0.43     $ 0.77       (44.2) %     $ 0.80     $ 1.46       (45.2) %
Adjustments:
                                                  
Non-Cash asset impairments charges
     0.06       —                 0.06       —          
Mortgage debt refinance charges
     0.01       —                 0.01       —          
Gain on dealership disposition
     (0.04 )     —                 (0.02 )     —          
Gain on debt redemption
     (0.02 )     —                 (0.21 )     —          
Lease termination charges
     —       0.02                 —       0.02          
 
                                          
Adjusted diluted income per share from continuing operations (1)
     0.44       0.79       (44.3) %       0.64       1.48       (56.8) %
 
(1)   Adjusted net income from continuing operations and adjusted diluted earnings per share from continuing operations means net income from continuing operations or diluted earnings per share from continuing operations, as the case may be, plus the adjustments noted above. We use adjusted net income from continuing operations and adjusted diluted earnings per share from continuing operations in our evaluation of the performance of the company, as we believe that they provide additional information regarding the performance of our operations. We believe the presentation of these measures is relevant and useful to investors because they improve period-to-period comparability. Neither of these measures is a measure of financial performance under GAAP. Accordingly, they should not be considered as substitutes for net income from continuing operations or diluted earnings per share from continuing operations prepared in accordance with GAAP. Although we find these non-GAAP results useful in evaluating the performance of our business, our reliance on these measures is limited because the adjustments often have a material impact on our net income from continuing operations and diluted earnings per share from continuing operations calculated in accordance with GAAP. Therefore, we typically use these adjusted numbers in conjunction with our GAAP results to address these limitations.