EX-99.1 2 h68261exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
     
    (GROUP 1 AUTOMOTIVE LOGO)
NEWS RELEASE   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, OCT. 27, 2009
GROUP 1 AUTOMOTIVE DOUBLES PROFITABILITY IN THIRD QUARTER 2009
Operating Margins Improved; Full-Year Guidance Revised
HOUSTON, Oct. 27, 2009 — Group 1 Automotive, Inc. (NYSE: GPI), a Fortune 500 automotive retailer, today reported third-quarter adjusted net income from continuing operations of $16.8 million, or $0.71 per diluted share, for the period ended Sept. 30, 2009, as compared to the 2008 adjusted results of $8.2 million, or $0.37 per diluted share. For comparison purposes, as shown in the attached reconciliation table, the adjusted 2009 third-quarter results excluded net after-tax gains of $1.5 million, or $0.07 per diluted share, for an income tax benefit related to tax elections that reduced the tax liability for prior-period items; non-cash asset impairment charges, primarily related to real estate holdings; and, gains on debt redemptions. The adjusted 2008 third-quarter results excluded net after-tax charges of $30.0 million, or $1.33 per diluted share, for non-cash asset impairment and lease termination charges, and gains on debt redemptions. Including the one-time items, net income from continuing operations was $18.3 million, or $0.78 per diluted share, for the quarter ended Sept. 30, 2009.
“Our strong third-quarter performance validates that Group 1’s business model is flexible enough to react quickly to changes in market conditions,” said Earl J. Hesterberg, Group 1’s president and chief executive officer. “The cost reductions and inventory controls we implemented in the first half of the year have positioned Group 1 to benefit from any improvement in new vehicle volumes, as demonstrated this quarter.”
Third-Quarter Operating Highlights
•   Group 1 retailed 25,057 new vehicles during the quarter, including 4,874 under the government’s CARS program.
 
•   Group 1’s same-store gross margin improved 100 basis points, to 17.0 percent, from third quarter 2008. The gross margin improvement was attributed to improved new vehicle, total used vehicle and the parts and service margins, as well as the continued mix shift to the more profitable segments of the business.
 
•   Same-store new vehicle margins expanded 90 basis points from the second-quarter, to 6.7 percent, as lower inventory and stronger demand combined to provide a more favorable selling environment.
 
•   Same-store used vehicle gross profit improved $228 per wholesale unit, from the prior-year quarter, as limited supply increased valuations, while retail gross margins fell 30 basis points, to 10.3 percent, as more vehicles were sourced at auction.
 
•   Group 1’s same-store parts and service business improved on both a year-over-year and sequential basis, with a gross margin of 53.7 percent.
 
•   On a consolidated basis, Group 1’s selling, general and administrative (SG&A) expenses were reduced $26.7 million in the quarter, bringing the total expense reduction to $112.8 million year to date.

 

 

Group 1 Automotive, Inc.
•   Operating margin improved to 3.4 percent.
 
•   Generated $54.8 million in adjusted operating cash flow during the quarter and $100.7 million year to date.
Corporate Development Update
Year to date, Group 1 has added three franchises with estimated annual revenues of approximately $46.7 million and has disposed of eight franchises with annual revenues of $126.2 million.
Group 1’s Balance Sheet Strengthened
Group 1 reported its new vehicle inventory stood at $298.7 million on Sept. 30, reflecting a $75.7 million reduction from the second quarter and a $370.6 million reduction from the prior-year period. In addition, the company reduced non-floorplan debt by $37.1 million during the quarter, primarily reflecting the payoff of its outstanding acquisition line borrowings of $30.0 million and repurchases of $5.0 million of its 2.25 percent convertible bonds. The company ended the quarter with overall immediately available funds of $85.9 million and overall available liquidity of $232.8 million.
“With the strong operating cash that the company generated this year, we continued to strengthen Group 1’s balance sheet by reducing total non-floorplan debt by $112.4 million during the nine-month period,” said John C. Rickel, Group 1’s senior vice president and chief financial officer.
2009 Full-Year Guidance Revised
Group 1 has revised its 2009 full-year earnings guidance to a range of $1.66 to $1.76 per diluted share under the following assumptions:
  •   Industry seasonally adjusted annual sales rate (SAAR) of 10.0 to 10.2 million vehicles
 
  •   Total year-over-year reduction in SG&A expenses of $120 million at projected SAAR levels
 
  •   Tax rate of 38.0 percent
 
  •   Estimated average diluted shares outstanding of 23.4 million
 
  •   Capital expenditures of approximately $20 million
 
  •   Guidance includes the impact of APB 14-1 and excludes the impact of future acquisitions, dispositions with their potential exit costs, and any potential one-time items
Fourth-quarter same-store assumptions:
  •   New vehicle margins of 6.0 percent to 6.5 percent
 
  •   Used vehicle retail margins of 10.0 percent to 10.5 percent
 
  •   Used vehicle wholesale margins at about break-even
 
  •   Flat parts and service revenues
 
  •   Finance and insurance gross profit of $925 to $950 per retail unit
Third-Quarter Earnings Conference Call (REPLAY NUMBER UPDATED)
Group 1’s senior management will host a conference call today at 10 a.m. ET to discuss the third-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:
Domestic: 877.795.3648
International: 719.325.4752

 

 

Group 1 Automotive, Inc.
Participant Passcode: 8845933
A telephonic replay will be available following the call through Nov. 3 by dialing:
Domestic: 888.203.1112
International: 719.457.0820 (UPDATED)
Replay Passcode: 8845933
About Group 1 Automotive, Inc.
Group 1 owns and operates 96 automotive dealerships, 128 franchises, and 23 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 September 30,       Nine Months Ended September 30,  
    2009     2008     % Change       2009     2008     % Change  
REVENUES:
                                                  
New vehicle retail sales
   $ 728,089     $ 877,669       (17.0 )%     $ 1,883,973     $ 2,737,732       (31.2 )%
Used vehicle retail sales
     254,716       262,443       (2.9 )       729,345       865,031       (15.7 )
Used vehicle wholesale sales
     43,151       58,689       (26.5 )       112,536       193,412       (41.8 )
Parts and service
     183,254       188,576       (2.8 )       547,224       572,165       (4.4 )
Finance and insurance
     37,509       46,597       (19.5 )       102,213       152,012       (32.8 )
 
                                      
Total revenues
     1,246,719       1,433,974       (13.1 )%       3,375,291       4,520,352       (25.3) %
 
                                                  
COST OF SALES:
                                                  
New vehicle retail sales
     679,470       821,964       (17.3 )%       1,770,900       2,561,863       (30.9 )%
Used vehicle retail sales
     228,445       234,527       (2.6 )       652,640       771,132       (15.4 )
Used vehicle wholesale sales
     41,872       59,623       (29.8 )       109,205       195,081       (44.0 )
Parts and service
     84,911       88,241       (3.8 )       256,756       263,667       (2.6 )
 
                                      
Total cost of sales
     1,034,698       1,204,355       (14.1 )%       2,789,501       3,791,743       (26.4 )%
 
                                                  
 
                                      
GROSS PROFIT
     212,021       229,619       (7.7 )%       585,790       728,609       (19.6 )%
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
     162,466       189,209       (14.1 )       466,813       579,608       (19.5 )
DEPRECIATION AND AMORTIZATION EXPENSE
     6,666       6,734       (1.0 )       19,541       19,049       2.6  
ASSET IMPAIRMENTS
     702       48,086       (98.5 )       2,837       48,086       (94.1 )
 
                                      
OPERATING INCOME (LOSS)
     42,187       (14,410 )     392.8 %       96,599       81,866       18.0 %
 
                                                  
OTHER INCOME (EXPENSE):
                                                  
Floorplan interest expense
     (7,523 )     (11,236 )     (33.0 )       (24,342 )     (35,636 )     (31.7 )
Other interest expense, net
     (7,318 )     (9,202 )     (20.5 )       (21,857 )     (27,981 )     (21.9 )
Gain on redemption of long-term debt
     598       495       20.8         8,211       904       808.3  
Other income (expense), net
     (4 )     (41 )     (90.2 )       (6 )     273       (102.2 )
 
                                      
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
     27,940       (34,394 )     181.2 %       58,605       19,426       201.7 %
 
                                                  
BENEFIT FROM (PROVISION FOR) INCOME TAXES
     (9,600 )     12,577       (176.3 )       (21,808 )     (8,059 )     170.6  
 
                                                  
 
                                      
INCOME (LOSS) FROM CONTINUING OPERATIONS
     18,340       (21,817 )     184.1 %       36,797       11,367       223.7 %
 
                                                  
DISCONTINUED OPERATIONS:
                                                  
Loss related to discontinued operations
     —       —       —         —       (3,481 )     (100.0 )
Income tax benefit related to loss on discontinued operations
     —       —       —         —       1,478       (100.0 )
 
                                      
LOSS RELATED TO DISCONTINUED OPERATIONS
     —       —       —         —       (2,003 )     (100.0 )
 
                                                  
 
                                      
NET INCOME (LOSS)
   $ 18,340     $ (21,817 )     184.1 %     $ 36,797     $ 9,364     $ 293.0 %
 
                                      
 
                                                  
DILUTED INCOME (LOSS) PER SHARE:
                                                  
Income (loss) per share from continuing operations
   $ 0.78     $ (0.96 )     181.3 %     $ 1.58     $ 0.50       216.0 %
Loss per share related to discontinued operations
     —       —       —         —       (0.09 )     (100.0 )
 
                                      
Income (loss) per share
   $ 0.78     $ (0.96 )     181.3 %     $ 1.58     $ 0.41       285.4 %
 
                                      
 
                                                  
Weighted average diluted shares outstanding
     23,503       22,716       3.5 %       23,240       22,641       2.6 %

 

Group 1 Automotive, Inc.
Consolidated Balance Sheets
(Dollars in thousands)
                         
    September 30,     December 31,        
    2009     2008     % Change  
    (Unaudited)                  
ASSETS:
                        
 
                        
CURRENT ASSETS:
                        
Cash and cash equivalents
   $ 14,882     $ 23,144       (35.7 )%
Contracts in transit and vehicle receivables, net
     67,045       102,834       (34.8 )
Accounts and notes receivable, net
     52,667       67,350       (21.8 )
Inventories
     471,189       845,944       (44.3 )
Deferred income taxes
     15,504       18,474       (16.1 )
Prepaid expenses and other current assets
     31,781       38,878       (18.3 )
 
                  
Total current assets
     653,068       1,096,624       (40.4 )
PROPERTY AND EQUIPMENT, net
     492,191       514,891       (4.4 )
GOODWILL AND OTHER INTANGIBLES
     656,013       655,784       0.0  
OTHER ASSETS
     17,924       20,815       (13.9 )
 
                  
Total assets
   $ 1,819,196     $ 2,288,114       (20.5 )%
 
                  
 
                        
LIABILITIES AND STOCKHOLDERS’ EQUITY:
                        
 
                        
CURRENT LIABILITIES:
                        
Floorplan notes payable — credit facility
   $ 374,441     $ 738,551       (49.3) %
Offset account related to floorplan notes payable - credit facility
     (71,010 )     (44,859 )     58.3  
Floorplan notes payable — manufacturer affiliates
     89,654       128,580       (30.3 )
Current maturities of long-term debt
     13,663       13,594       0.5  
Accounts payable
     69,633       74,235       (6.2 )
Accrued expenses
     89,518       94,395       (5.2 )
 
                  
Total current liabilities
     565,899       1,004,496       (43.7 )
2.25% CONVERTIBLE SENIOR NOTES (aggregate principal of $182,753 and $224,500, respectively)
     130,449       155,333       (16.0 )
8.25% SENIOR SUBORDINATED NOTES
     73,189       72,962       0.3  
MORTGAGE FACILITY, net of current maturities
     179,669       168,583       6.6  
OTHER REAL ESTATE RELATED AND LONG-TERM DEBT, net of current maturities
     19,670       50,444       (61.0 )
CAPITAL LEASE OBLIGATIONS RELATED TO REAL ESTATE, net of current maturities
     38,125       39,401       (3.2 )
ACQUISITION LINE
     —       50,000       (100.0 )
DEFERRED INCOME TAXES
     25,643       2,768       826.4  
LIABILITIES FROM INTEREST RATE RISK MANAGEMENT ACTIVITIES
     37,455       44,655       (16.1 )
OTHER LIABILITIES
     26,925       27,135       (0.8 )
DEFERRED REVENUES
     6,743       10,220       (34.0 )
 
                        
STOCKHOLDERS’ EQUITY:
                        
Common stock
     261       261       —  
Additional paid-in capital
     348,913       351,405       (0.7 )
Retained earnings
     473,884       437,087       8.4  
Accumulated other comprehensive loss
     (30,615 )     (38,109 )     (19.7 )
Treasury stock
     (77,014 )     (88,527 )     (13.0 )
 
                  
Total stockholders’ equity
     715,429       662,117       8.1  
 
                  
Total liabilities and stockholders’ equity
   $ 1,819,196     $ 2,288,114       (20.5 )%
 
                  
 
                        
KEY DEBT COVENANT METRICS: *
                        
Senior secured leverage ratio (must be less than 2.75)
     1.11       1.49          
Total leverage ratio (must be less than 4.50)
     2.80       3.46          
Fixed charge coverage ratio (must be greater than 1.25)
     1.93       1.59          
Current ratio (must be greater than 1.15)
     1.39       1.18          
 
*   Refer to website, www.group1auto.com, for debt covenant calculation definitions.

 

 

Group 1 Automotive, Inc.
Consolidated Statements of Adjusted Cash Flows from Continuing Operations
(Unaudited)
(In thousands)
                                   
    Three Months Ended       Nine Months Ended  
    September 30,       September 30,  
    2009     2008       2009     2008  
Income from continuing operations
   $ 18,340     $ (21,817 )     $ 36,797     $ 11,367  
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
                                  
Asset Impairments
     702       48,086         2,837       48,086  
Depreciation and amortization
     6,666       6,734         19,541       19,049  
Deferred income taxes
     8,177       (11,533 )       23,078       9,279  
Amortization of debt discount and issue costs
     1,270       2,593         5,413       7,664  
Stock based compensation
     1,940       1,508         7,367       4,894  
Excess tax benefits from stock-based compensation
     (175 )     454         348       276  
Gain on redemption of long-term debt
     (598 )     (495 )       (8,211 )     (904 )
Other
     708       (426 )       (1,213 )     (137 )
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
                                  
Contracts-in-transit and vehicle receivables
     11,762       57,025         35,909       101,207  
Inventories
     69,500       72,535         373,146       28,261  
Floorplan notes payable — manufacturer affiliates
     4,265       (29,744 )       (39,454 )     (33,266 )
Floorplan notes payable — credit facility
     (83,806 )     (66,949 )       (364,109 )     (10,366 )
Accounts payable and accrued expenses
     2,251       (16,615 )       (15,478 )     (17,043 )
Accounts and notes receivable
     6,997       11,663         20,865       10,693  
Deferred revenues
     (913 )     (1,867 )       (3,477 )     (4,705 )
Prepaid expenses and other assets
     7,668       3,108         7,304       18,320  
 
                          
Adjusted net cash provided by operating activities, from continuing operations
   $ 54,754     $ 54,260       $ 100,663     $ 192,675  
 
                          

 

 

Group 1 Automotive, Inc.
Additional Information — Consolidated
(Unaudited)
                                         
            Three Months Ended,   Nine Months Ended,
            September 30,   September 30,
            2009   2008   2009   2008
NEW VEHICLE UNIT SALES GEOGRAPHIC MIX:                                
Region
   Geographic Market                                
Eastern
   Massachusetts     16.6 %     12.9 %     15.2 %     12.1 %
 
   New Jersey     6.2       7.1       6.6       6.9  
 
   New Hampshire     4.6       3.9       4.1       3.6  
 
   New York     3.5       4.0       4.1       4.2  
 
   Georgia     3.5       3.4       3.6       3.4  
 
   Louisiana     3.1       2.9       3.2       3.2  
 
   Mississippi     1.9       1.6       1.8       1.6  
 
   Florida     1.3       2.3       1.6       2.5  
 
   Maryland     0.9       0.8       0.9       0.5  
 
   Alabama     0.6       0.9       0.6       0.9  
 
   South Carolina     0.3       0.3       0.3       0.3  
 
                                        
 
             42.5       40.1       42.0       39.2  
 
                                        
Central
   Texas     31.6       31.0       32.1       32.1  
 
   Oklahoma     8.2       9.6       8.4       9.5  
 
   Kansas     1.2       1.4       1.2       1.3  
 
                                        
 
             41.0       42.0       41.7       42.9  
 
                                        
Western
   California     14.2       16.2       14.1       16.2  
 
                                        
International
   United Kingdom     2.3       1.7       2.2       1.7  
 
                                        
 
             100.0 %     100.0 %     100.0 %     100.0 %
 
                                        
NEW VEHICLE UNIT SALES BRAND MIX:                                
Toyota/Scion/Lexus
             38.4 %     34.2 %     36.2 %     34.9 %
Nissan/Infiniti
             14.1       13.5       12.9       13.1  
Honda/Acura
             12.2       14.5       13.0       14.2  
BMW/Mini
             9.2       9.4       9.5       8.5  
Ford
             8.0       9.8       8.6       10.3  
Mercedes-Benz
             4.8       6.0       5.4       5.7  
Chrysler
             4.4       5.1       5.7       5.9  
GM
             3.4       4.9       3.7       4.8  
Other
             5.5       2.6       5.0       2.6  
 
                                        
 
             100.0 %     100.0 %     100.0 %     100.0 %
 
                                        
NEW VEHICLE UNIT OTHER MIX:                                
Import
             62.4 %     56.8 %     58.5 %     56.8 %
Luxury
             22.5       25.4       24.4       24.3  
Domestic
             15.1       17.8       17.1       18.9  
 
                                        
 
             100.0 %     100.0 %     100.0 %     100.00 %
 
                                        
Car
             62.2 %     56.4 %     59.1 %     57.9 %
Truck
             37.8       43.6       40.9       42.1  
 
                                        
 
             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,  
    2009     2008     % Change       2009     2008     % Change  
REVENUES:
                                                  
New vehicle retail sales
   $ 728,089     $ 877,669       (17.0 )%     $ 1,883,973     $ 2,737,732       (31.2 )%
 
                                                  
Used vehicle retail sales
     254,716       262,443       (2.9 )       729,345       865,031       (15.7 )
Used vehicle wholesale sales
     43,151       58,689       (26.5 )       112,536       193,412       (41.8 )
 
                                          
Total used
     297,867       321,132       (7.2 )       841,881       1,058,443       (20.5 )
Parts and service
     183,254       188,576       (2.8 )       547,224       572,165       (4.4 )
Finance and insurance
     37,509       46,597       (19.5 )       102,213       152,012       (32.8 )
 
                                          
Total
   $ 1,246,719     $ 1,433,974       (13.1 )%     $ 3,375,291     $ 4,520,352       (25.3 )%
 
                                                  
GROSS MARGIN:
                                                  
New vehicle retail sales
     6.7 %     6.3 %               6.0 %     6.4 %        
 
                                                  
Used vehicle retail sales
     10.3       10.6                 10.5       10.9          
Used vehicle wholesale sales
     3.0       (1.6 )               3.0       (0.9 )        
Total used
     9.2       8.4                 9.5       8.7          
Parts and service
     53.7       53.2                 53.1       53.9          
Finance and insurance
     100.0       100.0                 100.0       100.0          
Total
     17.0 %     16.0 %               17.4 %     16.1 %        
 
                                                  
GROSS PROFIT:
                                                  
New vehicle retail sales
   $ 48,619     $ 55,705       (12.7 )%     $ 113,073     $ 175,869       (35.7 )%
 
                                                  
Used vehicle retail sales
     26,271       27,916       (5.9 )       76,705       93,899       (18.3 )
Used vehicle wholesale sales
     1,279       (934 )     236.9         3,331       (1,669 )     299.6  
 
                                          
Total used
     27,550       26,982       2.1         80,036       92,230       (13.2 )
Parts and service
     98,343       100,335       (2.0 )       290,468       308,498       (5.8 )
Finance and insurance
     37,509       46,597       (19.5 )       102,213       152,012       (32.8 )
 
                                          
Total
   $ 212,021     $ 229,619       (7.7 )%     $ 585,790     $ 728,609       (19.6 )%
 
                                                  
UNITS SOLD:
                                                  
Retail new vehicles sold
     25,057       28,661       (12.6 )%       62,942       89,548       (29.7 )%
 
                                                  
Retail used vehicles sold
     14,175       15,057       (5.9 )       41,181       48,945       (15.9 )
Wholesale used vehicles sold
     8,367       9,399       (11.0 )       21,222       29,651       (28.4 )
 
                                          
 
                                                  
Total used
     22,542       24,456       (7.8 )%       62,403       78,596       (20.6 )%
 
                                                  
GROSS PROFIT PER UNIT SOLD:
                                                  
New vehicle retail sales
   $ 1,940     $ 1,944       (0.2 )%     $ 1,796     $ 1,964       (8.6 )%
 
                                                  
Used vehicle retail sales
     1,853       1,854       (0.1 )       1,863       1,918       (2.9 )
Used vehicle wholesale sales
     153       (99 )     254.5         157       (56 )     380.4  
Total used
     1,222       1,103       10.8         1,283       1,173       9.4  
Finance and insurance (per retail unit)
   $ 956     $ 1,066       (10.3 )%     $ 982     $ 1,098       (10.6 )%
 
                                                  
OTHER:
                                                  
SG&A expenses
   $ 162,466     $ 189,209       (14.1 )%     $ 466,813     $ 579,608       (19.5 )%
SG&A as % revenues
     13.0 %     13.2 %               13.8 %     12.8 %        
SG&A as % gross profit
     76.6 %     82.4 %               79.7 %     79.5 %        
Operating margin
     3.4 %     (1.0 )%               2.9 %     1.8 %        
Pretax margin
     2.2 %     (2.4 )%               1.7 %     0.4 %        
 
                                                  
Floorplan interest
   $ (7,523 )   $ (11,236 )     (33.0 )%     $ (24,342 )   $ (35,636 )     (31.7 )%
Floorplan assistance
     5,771       7,383       (21.8 )       15,030       22,948       (34.5 )
 
                                          
Net floorplan expense
   $ (1,752 )   $ (3,853 )     (54.5 )%     $ (9,312 )   $ (12,688 )     (26.6 )%

 

 

Group 1 Automotive, Inc.
Additional Information — Same Store(1)
(Unaudited)
(Dollars in thousands, except per unit amounts)
                                                   
    Three Months Ended September 30,       Nine Months Ended September 30,  
    2009     2008     % Change       2009     2008     % Change  
REVENUES:
                                                  
New vehicle retail sales
   $ 728,090     $ 865,836       (15.9 )%     $ 1,871,662     $ 2,699,930       (30.7) %
 
                                                  
Used vehicle retail sales
     254,715       257,971       (1.3 )       722,965       851,505       (15.1 )
Used vehicle wholesale sales
     43,149       57,755       (25.3 )       111,574       190,438       (41.4 )
 
                                          
Total used
     297,864       315,726       (5.7 )       834,539       1,041,943       (19.9 )
Parts and service
     183,254       184,929       (0.9 )       542,403       561,552       (3.4 )
Finance and insurance
     37,471       46,217       (18.9 )       101,770       150,718       (32.5 )
 
                                          
Total
   $ 1,246,679     $ 1,412,708       (11.8 )%     $ 3,350,374     $ 4,454,143       (24.8) %
 
                                                  
GROSS MARGIN:
                                                  
New vehicle retail sales
     6.7 %     6.4 %               6.0 %     6.4 %        
 
                                                  
Used vehicle retail sales
     10.3       10.6                 10.5       10.8          
Used vehicle wholesale sales
     3.0       (1.2 )               3.0       (0.6 )        
Total used
     9.2       8.4                 9.5       8.7          
Parts and service
     53.7       53.3                 53.1       53.9          
Finance and insurance
     100.0       100.0                 100.0       100.0          
Total
     17.0 %     16.0 %               17.4 %     16.1 %        
 
                                                  
GROSS PROFIT:
                                                  
New vehicle retail sales
   $ 48,620     $ 55,114       (11.8 )%     $ 112,572     $ 173,670       (35.2) %
 
                                                  
Used vehicle retail sales
     26,273       27,363       (4.0 )       76,023       92,273       (17.6 )
Used vehicle wholesale sales
     1,277       (696 )     283.5         3,315       (1,189 )     378.8  
 
                                          
Total used
     27,550       26,667       3.3         79,338       91,084       (12.9 )
Parts and service
     98,371       98,507       (0.1 )       287,761       302,760       (5.0 )
Finance and insurance
     37,471       46,217       (18.9 )       101,770       150,718       (32.5 )
 
                                          
Total
   $ 212,012     $ 226,505       (6.4 )%     $ 581,441     $ 718,232       (19.0) %
 
                                                  
UNITS SOLD:
                                                  
Retail new vehicles sold
     25,057       28,269       (11.4 )%       62,608       88,318       (29.1) %
 
                                                  
Retail used vehicles sold
     14,175       14,792       (4.2 )       40,935       48,130       (14.9 )
Wholesale used vehicles sold
     8,367       9,251       (9.6 )       21,104       29,191       (27.7 )
 
                                          
 
                                                  
Total used
     22,542       24,043       (6.2 )%       62,039       77,321       (19.8) %
 
                                                  
GROSS PROFIT PER UNIT SOLD:
                                                  
New vehicle retail sales
   $ 1,940     $ 1,950       (0.5 )%     $ 1,798     $ 1,966       (8.5) %
 
                                                  
Used vehicle retail sales
     1,853       1,850       0.2         1,857       1,917       (3.1 )
Used vehicle wholesale sales
     153       (75 )     304.0         157       (41 )     482.9  
Total used
     1,222       1,109       10.2         1,279       1,178       8.6  
Finance and insurance (per retail unit)
   $ 955     $ 1,073       (11.0 )%     $ 983     $ 1,105       (11.0) %
 
                                                  
OTHER:
                                                  
SG&A expenses
   $ 162,007     $ 185,822       (12.8 )%     $ 462,735     $ 568,666       (18.6) %
SG&A as % revenues
     13.0 %     13.2 %               13.8 %     12.8 %        
SG&A as % gross profit
     76.4 %     82.0 %               79.6 %     79.2 %        
Operating margin
     3.4 %     (1.0) %               2.9 %     1.9 %        
Floorplan interest
   $ (7,522 )   $ (11,070 )     (32.1 )%     $ (24,253 )   $ (35,089 )     (30.9) %
Floorplan assistance
     5,771       7,272       (20.6 )       15,011       22,578       (33.5 )
 
                                          
Net floorplan expense
   $ (1,751 )   $ (3,798 )     (53.9 )%     $ (9,242 )   $ (12,511 )     (26.1) %
 
(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 September 30,       Nine Months Ended September 30,  
    2009     2008     % Change       2009     2008     % Change  
Reported income (loss) from continuing operations
   $ 18,340     $ (21,817 )     184.1 %     $ 36,797     $ 11,367       223.7 %
Adjustments:
                                                  
Non-Cash asset impairment charges
     461       30,174                 1,726       30,174          
Mortgage debt refinance charges
     —       —                 331       —          
Gain on dealership disposition
     —       —                 (451 )     —          
Gain on debt redemption
     (393 )     (303 )               (5,299 )     (555 )        
Income tax benefit related to tax elections for prior periods
     (1,604 )     —                 (1,604 )     —          
Lease termination charges
     —       135                 —       670          
 
                                          
Adjusted net income from continuing operations (1)
   $ 16,804     $ 8,189       105.2 %     $ 31,500     $ 41,656       (24.4 )%
DILUTED INCOME PER SHARE FROM CONTINUING OPERATIONS RECONCILIATION:
                                                   
    Three Months Ended September 30,       Nine Months Ended September 30,  
    2009     2008     % Change       2009     2008     % Change  
Reported income (loss) per share from continuing operations
   $ 0.78     $ (0.96 )     181.3 %     $ 1.58     $ 0.50       216.0 %
Adjustments:
                                                  
Non-Cash asset impairment charges
     0.02       1.33                 0.08       1.33          
Mortgage debt refinance charges
     —       —                 0.01       —          
Gain on dealership disposition
     —       —                 (0.02 )     —          
Gain on debt redemption
     (0.02 )     (0.01 )               (0.22 )     (0.02 )        
Income tax benefit related to tax elections for prior periods
     (0.07 )     —                 (0.07 )     —          
Lease termination charges
     —       0.01                 —       0.03          
 
                                          
Adjusted diluted income per share from continuing operations (1)
   $ 0.71     $ 0.37       91.9 %     $ 1.36     $ 1.84       (26.1 )%
CASH FLOWS FROM CONTINUING OPERATIONS RECONCILIATION:
                                                   
    Three Months Ended September 30,       Nine Months Ended September 30,  
    2009     2008     % Change       2009     2008     % Change  
Net cash provided by operating activities, from continuing operations
   $ 138,560     $ 121,209       14.3 %     $ 464,772     $ 203,041       128.9 %
Adjustments:
                                                  
Change in floorplan notes payable-credit facility, excluding floorplan offset account
     (83,806 )     (66,949 )               (364,109 )     (10,366 )        
 
                                          
Adjusted net cash provided by operating activities, from continuing operations (1)
   $ 54,754     $ 54,260       0.9 %     $ 100,663     $ 192,675       (47.8 )%
 
(1)   Adjusted net income from continuing operations, adjusted diluted earnings per share from continuing operations and adjusted net cash provided by operating activities, from continuing operations mean net income from continuing operations, diluted earnings per share from continuing operations and net cash provided by operating activities from continuing operations in accordance with GAAP, as the case may be, plus the adjustments noted above. We believe that these adjusted financial measures are relevant and useful to investors because they provide additional information regarding the performance of our operations and improve period-to-period comparability. These measures are not measures of financial performance under GAAP. Accordingly, they should not be considered as substitutes for their unadjusted counterparts, which are 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 financial statements calculated in accordance with GAAP. Therefore, we typically use these adjusted numbers in conjunction with our GAAP results to address these limitations.