EX-99.1 2 h77073exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(GROUP 1 LOGO)
FOR IMMEDIATE RELEASE
GROUP 1 AUTOMOTIVE REPORTS HIGHER EARNINGS DRIVEN BY 17 PERCENT REVENUE INCREASE
Used Vehicle and Parts and Service Sales Exceptionally Strong
HOUSTON, Oct. 26, 2010 — Group 1 Automotive, Inc. (NYSE: GPI), a Fortune 500 automotive retailer, today reported a third-quarter adjusted net income increase of 14.6 percent to $19.3 million, or $0.84 per diluted share, for the period ended Sept. 30, 2010. This compares to adjusted net income of $16.8 million, or $0.71 per diluted share, for the third quarter of 2009. Including the $0.3 million net after-tax adjustments for non-cash asset impairment charges and a gain on a real estate divestiture shown in the attached reconciliation table, net income for the third quarter of 2010 was $19.0 million, or $0.83 per diluted share.
Total company revenues for the quarter were up 17.2 percent driven by new vehicle sales increasing 12.9 percent, used vehicle sales growing 34.0 percent, finance and insurance sales improving 18.1 percent, and parts and service revenues expanding 7.1 percent.
“We are pleased with our sales performance in the third quarter. Our vehicle sales increase outpaced the market with new vehicle sales facing a challenging comparison versus last year’s ‘Cash for Clunkers’ program period,” said Earl J. Hesterberg, Group 1’s president and chief executive officer. “The dramatic revenue increases helped leverage the cost reductions and operating efficiencies Group 1 executed over the past two years. These results continue to demonstrate the leverage Group 1’s business model can deliver as sales volumes and revenues rebound.”
Third-Quarter Operating Highlights
•   Same-store new vehicle revenues increased 9.4 percent, outpacing the prior-year period when the ‘Cash for Clunkers’ incentive program inflated sales results.
 
•   Same-store total used vehicle revenues were 29.0 percent higher, reflecting 29.2 percent and 28.1 percent increases in used retail and wholesale revenues, respectively.
 
•   Same-store used vehicle gross profit was 9.8 percent higher, reflecting the 13.9 percent increase in profit earned on retailed units.
 
•   Same-store parts and service gross profit improved 8.1 percent on 7.3 percent higher revenues, reflecting Group 1’s continued focus on this segment.
 
•   Finance and insurance same-store gross profit expanded $83, to $1,037, per retail unit.
 
•   Selling, general and administrative expenses as a percent of gross profit continued to show sequential improvement, down 140 basis points, to 76.6 percent from the prior quarter on a consolidated basis.
“In addition to the great job our team did in the quarter on new and used vehicle sales, I am particularly proud of the outstanding results in parts and service, where same-store revenues increased 7.3 percent,” Hesterberg added. “The work we have done to improve processes surrounding customer service, parts inventory management and our collision centers, is beginning to deliver positive results.”
Balance Sheet
New vehicle inventory increased $52.8 million from the prior quarter to $537.6 million as of Sept. 30. The company ended the quarter with immediately available funds of $154.1 million and available liquidity of $291.6 million.

 

 

Group 1 Automotive, Inc.
Corporate Development Update
During the third quarter, Group 1 added a Lincoln franchise with estimated annual revenues of $3.0 million to an existing Ford store in West Texas.
Including the Lincoln franchise, Group 1 has acquired 10 franchises this year with total estimated annual revenues of $256.2 million.
Share Repurchases
During the third quarter, Group 1 repurchased 294,098 shares of its common stock at an average price of $25.56 under a board-authorized $25.0 million share repurchase program. At the end of the third quarter, $17.5 million remained under the authorization.
Third-Quarter Earnings Conference Call
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 outlook and strategy.
The conference call will be simulcast live on the Internet at www.group1auto.com, then click on ‘Investor Relations’ and then ‘Events’ or through this link: http://www.group1corp.com/news/events.aspx. 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: 877.795.3649
International: 719.325.4753
Participant Passcode: 3452864
A telephonic replay will be available following the call through Nov. 2 by dialing:
Domestic: 888.203.1112
International: 719.457.0820
Replay Passcode: 3452864
About Group 1 Automotive, Inc.
Group 1 owns and operates 101 automotive dealerships, 137 franchises, and 25 collision service centers in the United States and the United Kingdom that offer 32 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 and are based on our current expectations and assumptions regarding our business, the economy and other future conditions. 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,” “may” or “will” and similar expressions. Any such forward-looking statements are not assurances of future performance and involve risks and uncertainties that may cause actual 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, whether as a result of new information, future developments or otherwise, except as may be required by law.

 

 

Group 1 Automotive, Inc.
SOURCE: Group 1 Automotive, Inc.
Investor contacts:
Kim Paper Canning, Manager, Investor Relations | Group 1 Automotive Inc. | 713-647-5741 | kpaper@group1auto.com
Media contacts:
Pete DeLongchamps, Vice President, Manufacturer Relations and Public Affairs | Group 1 Automotive Inc. | 713-647-5770 | pdelongchamps@group1auto.com
or
Clint Woods, Pierpont Communications, Inc. | 713-627-2223 | cwoods@piercom.com
FINANCIAL TABLES 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,  
    2010     2009     % Change     2010     2009     % Change  
REVENUES:
                                                
New vehicle retail sales
   $ 822,121     $ 728,089       12.9 %   $ 2,254,093     $ 1,883,973       19.6 %
Used vehicle retail sales
     340,625       254,716       33.7       960,376       729,345       31.7  
Used vehicle wholesale sales
     58,463       43,151       35.5       156,653       112,536       39.2  
Parts and service
     196,264       183,254       7.1       575,762       547,224       5.2  
Finance and insurance
     44,282       37,509       18.1       124,533       102,213       21.8  
 
                                    
Total revenues
     1,461,755       1,246,719       17.2       4,071,417       3,375,291       20.6  
 
                                                
COST OF SALES:
                                                
New vehicle retail sales
     775,046       679,470       14.1       2,122,533       1,770,900       19.9  
Used vehicle retail sales
     310,055       228,445       35.7       870,823       652,640       33.4  
Used vehicle wholesale sales
     58,158       41,872       38.9       153,565       109,205       40.6  
Parts and service
     89,657       84,911       5.6       264,484       256,756       3.0  
 
                                    
Total cost of sales
     1,232,916       1,034,698       19.2       3,411,405       2,789,501       22.3  
 
                                                
 
                                    
GROSS PROFIT
     228,839       212,021       7.9       660,012       585,790       12.7  
 
                                                
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
     173,925       162,466       7.1       522,796       466,813       12.0  
 
                                                
DEPRECIATION AND AMORTIZATION EXPENSE
     6,772       6,666       1.6       19,936       19,541       2.0  
 
                                                
ASSET IMPAIRMENTS
     1,639       702       133.5       3,121       2,837       10.0  
 
                                                
 
                                    
OPERATING INCOME
     46,503       42,187       10.2       114,159       96,599       18.2  
 
                                                
OTHER INCOME (EXPENSE):
                                                
Floorplan interest expense
     (9,021 )     (7,523 )     19.9       (25,220 )     (24,342 )     3.6  
 
                                                
Other interest expense, net
     (6,894 )     (7,318 )     (5.8 )     (20,265 )     (21,857 )     (7.3 )
 
                                                
Gain (loss) on redemption of long-term debt
     —       598       (100.0 )     (3,872 )     8,211       (147.2 )
 
                                                
Other expense, net
     —       (4 )     (100.0 )     —       (6 )     (100.0 )
 
                                                
 
                                    
INCOME BEFORE INCOME TAXES
     30,588       27,940       9.5       64,802       58,605       10.6  
 
                                                
PROVISION FOR INCOME TAXES
     (11,603 )     (9,600 )     20.9       (25,067 )     (21,808 )     14.9  
 
                                                
 
                                    
NET INCOME
   $ 18,985     $ 18,340       3.5 %   $ 39,735     $ 36,797       8.0 %
 
                                    
 
                                                
DILUTED INCOME PER SHARE
   $ 0.83     $ 0.78       6.4 %   $ 1.70     $ 1.58       7.6 %
 
                                                
Weighted average diluted shares outstanding
     22,926       23,503       (2.5) %     23,414       23,240       0.7 %

 

 

Group 1 Automotive, Inc.
Consolidated Balance Sheets
(Dollars in thousands)
                         
    September 30,     December 31,        
    2010     2009     % Change  
    (Unaudited)                  
ASSETS:
                        
 
                        
CURRENT ASSETS:
                        
Cash and cash equivalents
   $ 96,162     $ 13,221       627.3 %
Contracts in transit and vehicle receivables, net
     92,649       86,500       7.1  
Accounts and notes receivable, net
     66,492       62,496       6.4  
Inventories
     757,201       596,743       26.9  
Deferred income taxes
     15,340       14,653       4.7  
Prepaid expenses and other current assets
     37,520       48,425       (22.5 )
 
                  
Total current assets
     1,065,364       822,038       29.6  
PROPERTY AND EQUIPMENT, net
     458,303       475,828       (3.7 )
GOODWILL AND INTANGIBLE FRANCHISE RIGHTS
     667,387       658,281       1.4  
OTHER ASSETS
     10,458       13,267       (21.2 )
 
                  
Total assets
   $ 2,201,512     $ 1,969,414       11.8 %
 
                  
 
                        
LIABILITIES AND STOCKHOLDERS’ EQUITY:
                        
 
                        
CURRENT LIABILITIES:
                        
Floorplan notes payable — credit facility
   $ 656,701     $ 491,892       33.5 %
Offset account related to floorplan notes payable — credit facility
     (57,963 )     (71,573 )     (19.0 )
Floorplan notes payable — manufacturer affiliates
     103,922       115,180       (9.8 )
Current maturities of long-term debt
     14,304       14,355       (0.4 )
Current liabilities from interest rate risk management activities
     4,357       10,412       (58.2 )
Accounts payable
     84,864       72,276       17.4  
Accrued expenses
     83,459       86,271       (3.3 )
 
                  
Total current liabilities
     889,644       718,813       23.8  
2.25% CONVERTIBLE SENIOR NOTES (aggregate principal of $182,753 at September 30, 2010 and December 31, 2009)
     136,554       131,932       3.5  
3.00% CONVERTIBLE SENIOR NOTES (aggregate principal of $115,000 at September 30, 2010)
     73,645       —       100.0  
8.25% SENIOR SUBORDINATED NOTES
     —       73,267       (100.0 )
MORTGAGE FACILITY, net of current maturities
     148,469       182,216       (18.5 )
OTHER REAL ESTATE RELATED AND LONG-TERM DEBT, net of current maturities
     34,860       19,040       83.1  
CAPITAL LEASE OBLIGATIONS RELATED TO REAL ESTATE, net of current maturities
     38,115       37,686       1.1  
DEFERRED INCOME TAXES
     56,376       33,932       66.1  
LIABILITIES FROM INTEREST RATE RISK MANAGEMENT ACTIVITIES
     19,960       20,151       (0.9 )
OTHER LIABILITIES
     29,585       26,633       11.1  
DEFERRED REVENUES
     3,829       5,588       (31.5 )
 
                        
STOCKHOLDERS’ EQUITY:
                        
Common stock
     263       262       0.4  
Additional paid-in capital
     371,112       346,055       7.2  
Retained earnings
     511,667       471,932       8.4  
Accumulated other comprehensive loss
     (22,162 )     (26,256 )     (15.6 )
Treasury stock
     (90,405 )     (71,837 )     25.8  
 
                  
Total stockholders’ equity
     770,475       720,156       7.0  
 
                  
Total liabilities and stockholders’ equity
   $ 2,201,512     $ 1,969,414       11.8 %
 
                  
 
                        
KEY DEBT COVENANT METRICS:
                        
Senior secured leverage ratio (must be less than 2.75)
     1.24       1.31          
Total leverage ratio (must be less than 4.50)
     3.61       3.29          
Fixed charge coverage ratio (must be greater than 1.25)
     1.70       1.76          
Current ratio (must be greater than 1.15)
     1.35       1.34          

 

 

Group 1 Automotive, Inc.
Consolidated Statements of Adjusted Cash Flows from Operating Activities
(Unaudited, In thousands)
                                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2010     2009     % Change     2010     2009     % Change  
Net income
   $ 18,985     $ 18,340       3.5 %   $ 39,735     $ 36,797       8.0 %
Adjustments to reconcile net income to net cash provided by operating activities:
                                                
Asset Impairments
     1,639       702       133.5       3,121       2,837       10.0  
Depreciation and amortization
     6,772       6,666       1.6       19,936       19,541       2.0  
Deferred income taxes
     10,062       8,177       23.1       22,224       23,078       (3.7 )
(Gain) loss on redemption of long-term debt
     —       (598 )     (100.0 )     3,872       (8,211 )     147.2  
(Gain) loss on sale of assets
     (1,282 )     842       (252.3 )     3,170       (6 )     52,933.3  
Stock-based compensation
     2,329       1,940       20.1       7,505       7,367       1.9  
Amortization of debt discount and issue costs
     2,379       1,270       87.3       6,336       5,413       17.1  
Other
     416       (309 )     234.6       854       (859 )     199.4  
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
                                                
Inventories
     (59,922 )     69,500       (186.2 )     (154,299 )     373,146       (141.4 )
Floorplan notes payable — credit facility
     52,865       (83,806 )     163.1       164,809       (364,109 )     145.3  
Floorplan notes payable — manufacturer affiliates
     3,029       4,265       (29.0 )     (9,548 )     (39,454 )     (75.8 )
Contracts-in-transit and vehicle receivables
     18,600       11,762       58.1       (6,181 )     35,909       (117.2 )
Accounts and notes receivable
     1,381       6,997       (80.3 )     (4,938 )     20,865       (123.7 )
Prepaid expenses and other assets
     3,294       7,668       (57.0 )     5,088       7,304       (30.3 )
Deferred revenues
     (816 )     (913 )     (10.6 )     (1,759 )     (3,477 )     (49.4 )
Accounts payable and accrued expenses
     (5,175 )     2,251       (329.9 )     10,524       (15,478 )     168.0  
 
                                    
Adjusted net cash provided by operating activities
   $ 54,556     $ 54,754       (0.4 )%   $ 110,449     $ 100,663       9.7 %
 
                                    

 

 

Group 1 Automotive, Inc.
Additional Information — Consolidated
(Unaudited)
                                     
        Three Months Ended     Nine Months Ended  
        September 30,     September 30,  
        2010     2009     2010     2009  
NEW VEHICLE UNIT SALES GEOGRAPHIC MIX:                                
Region
   Geographic Market                                
Eastern
   Massachusetts     14.6 %     16.6 %     14.8 %     15.2 %
 
   New Jersey     6.1       6.2       6.5       6.6  
 
   Georgia     4.1       3.5       3.9       3.6  
 
   New Hampshire     4.0       4.6       4.2       4.1  
 
   New York     3.7       3.5       3.8       4.1  
 
   Louisiana     3.3       3.1       3.1       3.2  
 
   Mississippi     1.7       1.9       1.7       1.8  
 
   South Carolina     1.6       0.3       1.1       0.3  
 
   Alabama     1.2       0.6       1.3       0.6  
 
   Florida     0.8       1.3       1.4       1.6  
 
   Maryland     0.8       0.9       0.8       0.9  
 
                            
 
         41.9       42.5       42.6       42.0  
 
                                    
Central
   Texas     30.9       31.6       30.8       32.1  
 
   Oklahoma     7.7       8.2       7.9       8.4  
 
   Kansas     0.8       1.2       0.9       1.2  
 
                            
 
         39.4       41.0       39.6       41.7  
 
                                    
Western
   California     14.0       14.2       13.4       14.1  
 
                                    
International
   United Kingdom     4.7       2.3       4.4       2.2  
 
                            
 
         100.0 %     100.0 %     100.0 %     100.0 %
 
                                    
NEW VEHICLE UNIT SALES BRAND MIX:                                
Toyota/Scion/Lexus
         36.5 %     38.4 %     35.5 %     36.2 %
Nissan/Infiniti
         14.1       14.1       14.6       12.9  
BMW/Mini
         11.9       9.2       11.3       9.5  
Honda/Acura
         11.8       12.2       12.2       13.0  
Ford
         7.2       7.4       8.0       7.8  
Mercedes-Benz
         5.7       4.8       5.6       5.4  
GM
         3.9       3.4       4.0       3.7  
Chrysler
         3.0       4.4       2.9       5.7  
Other
         5.9       6.1       5.9       5.8  
 
                            
 
         100.0 %     100.0 %     100.0 %     100.0 %
 
                                    
NEW VEHICLE UNIT SALES OTHER MIX:                                
Import
         58.8 %     62.4 %     58.3 %     58.5 %
Luxury
         27.1       22.5       27.0       24.4  
Domestic
         14.1       15.1       14.7       17.1  
 
                            
 
         100.0 %     100.0 %     100.0 %     100.0 %
 
                                    
Car
         59.4 %     62.2 %     58.8 %     59.1 %
Truck
         40.6       37.8       41.2       40.9  
 
                            
 
         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,  
    2010     2009     % Change     2010     2009     % Change  
REVENUES:
                                                
New vehicle retail sales
   $ 822,121     $ 728,089       12.9 %   $ 2,254,093     $ 1,883,973       19.6 %
 
                                                
Used vehicle retail sales
     340,625       254,716       33.7       960,376       729,345       31.7  
Used vehicle wholesale sales
     58,463       43,151       35.5       156,653       112,536       39.2  
 
                                        
Total used
     399,088       297,867       34.0       1,117,029       841,881       32.7  
Parts and service
     196,264       183,254       7.1       575,762       547,224       5.2  
Finance and insurance
     44,282       37,509       18.1       124,533       102,213       21.8  
 
                                        
Total
   $ 1,461,755     $ 1,246,719       17.2 %   $ 4,071,417     $ 3,375,291       20.6 %
 
                                                
GROSS MARGIN:
                                                
New vehicle retail sales
     5.7 %     6.7 %             5.8 %     6.0 %        
 
                                                
Used vehicle retail sales
     9.0       10.3               9.3       10.5          
Used vehicle wholesale sales
     0.5       3.0               2.0       3.0          
Total used
     7.7       9.2               8.3       9.5          
Parts and service
     54.3       53.7               54.1       53.1          
Finance and insurance
     100.0       100.0               100.0       100.0          
Total
     15.7 %     17.0 %             16.2 %     17.4 %        
 
                                                
GROSS PROFIT:
                                                
New vehicle retail sales
   $ 47,075     $ 48,619       (3.2 )%   $ 131,560     $ 113,073       16.3 %
 
                                                
Used vehicle retail sales
     30,570       26,271       16.4       89,553       76,705       16.7  
Used vehicle wholesale sales
     305       1,279       (76.2 )     3,088       3,331       (7.3 )
 
                                        
Total used
     30,875       27,550       12.1       92,641       80,036       15.7  
Parts and service
     106,607       98,343       8.4       311,278       290,468       7.2  
Finance and insurance
     44,282       37,509       18.1       124,533       102,213       21.8  
 
                                        
Total
   $ 228,839     $ 212,021       7.9 %   $ 660,012     $ 585,790       12.7 %
 
                                                
UNITS SOLD:
                                                
Retail new vehicles sold
     26,396       25,057       5.3 %     72,128       62,942       14.6 %
 
                                                
Retail used vehicles sold
     17,601       14,175       24.2       50,230       41,181       22.0  
Wholesale used vehicles sold
     9,308       8,367       11.2       24,716       21,222       16.5  
 
                                        
Total used
     26,909       22,542       19.4 %     74,946       62,403       20.1 %
 
                                                
GROSS PROFIT PER UNIT SOLD:
                                                
New vehicle retail sales
   $ 1,783     $ 1,940       (8.1 )%   $ 1,824     $ 1,796       1.6 %
 
                                                
Used vehicle retail sales
     1,737       1,853       (6.3 )     1,783       1,863       (4.3 )
Used vehicle wholesale sales
     33       153       (78.4 )     125       157       (20.4 )
Total used
     1,147       1,222       (6.1 )     1,236       1,283       (3.7 )
Finance and insurance (per retail unit)
   $ 1,006     $ 956       5.2 %   $ 1,018     $ 982       3.7 %
 
                                                
OTHER (1):
                                                
SG&A expenses
   $ 175,225     $ 162,466       7.9 %   $ 518,481     $ 467,516       10.9 %
SG&A as % revenues
     12.0 %     13.0 %             12.7 %     13.9 %        
SG&A as % gross profit
     76.6 %     76.6 %             78.6 %     79.8 %        
Operating margin
     3.2 %     3.4 %             3.0 %     2.9 %        
Pretax margin
     2.1 %     2.2 %             1.9 %     1.6 %        
 
                                                
FLOORPLAN EXPENSE:
                                                
Floorplan interest
   $ (9,021 )   $ (7,523 )     19.9 %   $ (25,220 )   $ (24,342 )     3.6 %
Floorplan assistance
     6,512       5,771       12.8       17,836       15,030       18.7  
 
                                        
Net floorplan expense
   $ (2,509 )   $ (1,752 )     43.2 %   $ (7,384 )   $ (9,312 )     (20.7 )%
 
(1)   These amounts have been adjusted to exclude the impact of certain items to provide additional information regarding the performance of our operations and improve period-to-period comparability. Refer to our Reconciliation of Certain Non-GAAP Financial Measures for a description of the aforementioned adjustments.

 

 

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,  
    2010     2009     % Change     2010     2009     % Change  
REVENUES:
                                                
New vehicle retail sales
   $ 783,782     $ 716,630       9.4 %   $ 2,170,481     $ 1,846,689       17.5 %
Used vehicle retail sales
     321,260       248,718       29.2       914,386       710,784       28.6  
Used vehicle wholesale sales
     54,092       42,213       28.1       147,124       109,691       34.1  
 
                                        
Total used
     375,352       290,931       29.0       1,061,510       820,475       29.4  
Parts and service
     190,157       177,285       7.3       560,192       531,810       5.3  
Finance and insurance
     43,337       36,661       18.2       122,408       99,983       22.4  
 
                                        
Total
   $ 1,392,628     $ 1,221,507       14.0 %   $ 3,914,591     $ 3,298,957       18.7 %
 
                                                
GROSS MARGIN:
                                                
New vehicle retail sales
     5.7 %     6.7 %             5.8 %     6.0 %        
Used vehicle retail sales
     9.1       10.3               9.4       10.5          
Used vehicle wholesale sales
     0.7       3.1               2.2       3.1          
Total used
     7.9       9.3               8.4       9.5          
Parts and service
     54.3       53.9               54.1       53.2          
Finance and insurance
     100.0       100.0               100.0       100.0          
Total
     15.9 %     17.0 %             16.4 %     17.4 %        
 
                                                
GROSS PROFIT:
                                                
New vehicle retail sales
   $ 44,514     $ 47,959       (7.2) %   $ 125,967     $ 111,517       13.0 %
Used vehicle retail sales
     29,217       25,657       13.9       86,344       74,679       15.6  
Used vehicle wholesale sales
     401       1,307       (69.3 )     3,298       3,364       (2.0 )
 
                                        
Total used
     29,618       26,964       9.8       89,642       78,043       14.9  
Parts and service
     103,278       95,515       8.1       302,920       282,887       7.1  
Finance and insurance
     43,337       36,661       18.2       122,408       99,983       22.4  
 
                                        
Total
   $ 220,747     $ 207,099       6.6 %   $ 640,937     $ 572,430       12.0 %
 
                                                
UNITS SOLD:
                                                
Retail new vehicles sold
     25,155       24,665       2.0 %     69,411       61,680       12.5 %
Retail used vehicles sold
     16,641       13,774       20.8       48,096       39,955       20.4  
Wholesale used vehicles sold
     8,790       8,123       8.2       23,626       20,661       14.4  
 
                                        
Total used
     25,431       21,897       16.1 %     71,722       60,616       18.3 %
 
                                                
GROSS PROFIT PER UNIT SOLD:
                                                
New vehicle retail sales
   $ 1,770     $ 1,944       (9.0) %   $ 1,815     $ 1,808       0.4 %
Used vehicle retail sales
     1,756       1,863       (5.7 )     1,795       1,869       (4.0 )
Used vehicle wholesale sales
     46       161       (71.4 )     140       163       (14.1 )
Total used
     1,165       1,231       (5.4 )     1,250       1,287       (2.9 )
Finance and insurance (per retail unit)
   $ 1,037     $ 954       8.7 %   $ 1,042     $ 984       5.9 %
 
                                                
OTHER:
                                                
SG&A expenses
   $ 167,571     $ 157,662       6.3 %   $ 500,160     $ 453,650       10.3 %
SG&A as % revenues
     12.0 %     12.9 %             12.8 %     13.8 %        
SG&A as % gross profit
     75.9 %     76.1 %             78.0 %     79.2 %        
Operating margin
     3.2 %     3.5 %             3.1 %     3.0 %        
 
                                                
FLOORPLAN EXPENSE:
                                                
Floorplan interest
   $ (8,851 )   $ (7,458 )     18.7 %   $ (24,785 )   $ (24,093 )     2.9 %
Floorplan assistance
     6,394       5,654       13.1       17,636       14,622       20.6  
 
                                        
Net floorplan expense
   $ (2,457 )   $ (1,804 )     36.2 %   $ (7,149 )   $ (9,471 )     (24.5) %
 
(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)
                                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2010     2009     % Change     2010     2009     % Change  
NET INCOME RECONCILIATION:
                                                
 
                                                
As reported
   $ 18,985     $ 18,340       3.5 %   $ 39,735     $ 36,797       8.0 %
After-tax Adjustments:
                                                
Non-Cash asset impairment charges(2)
     1,033       461               1,983       1,726          
Mortgage debt refinance charges(3)
     —       —               —       331          
Loss (gain) on dealership dispositions(4)
     —       —               3,698       (451 )        
Loss (gain) on debt redemption(5)
     —       (393 )             2,458       (5,299 )        
Severance costs related to UK-dealership acquisitions(6)
     —       —               405       —          
Income tax benefit related to tax elections for prior periods
     —       (1,604 )             —       (1,604 )        
Gain on sale of real estate(7)
     (761 )     —               (761 )     —          
 
                                        
Adjusted net income(1)
   $ 19,257     $ 16,804       14.6 %   $ 47,518     $ 31,500       50.9 %
 
                                                
DILUTED INCOME PER SHARE RECONCILIATION(10):
                                                
 
                                                
As reported
   $ 0.83     $ 0.78       6.4 %   $ 1.70     $ 1.58       7.6 %
After-tax Adjustments:
                                                
Non-Cash asset impairment charges
     0.04       0.02               0.09       0.08          
Mortgage debt refinance charges
     —       —               —       0.01          
Loss (gain) on dealership disposition
     —       —               0.15       (0.02 )        
Loss (gain) on debt redemption
     —       (0.02 )             0.10       (0.22 )        
Severance costs related to UK-dealership acquisitions
     —       —               0.02       —          
Income tax benefit related to tax elections for prior periods
     —       (0.07 )             —       (0.07 )        
Gain on sale of real estate
     (0.03 )     —               (0.03 )     —          
 
                                        
Adjusted diluted income per share(1)
   $ 0.84     $ 0.71       18.3 %   $ 2.03     $ 1.36       49.3 %
 
                                                
SG&A RECONCILIATION:
                                                
 
                                                
As reported
   $ 173,925     $ 162,466       7.1 %   $ 522,796     $ 466,813       12.0 %
Pre-tax Adjustments:
                                                
Gain (loss) on dealership dispositions
     —       —               (5,053 )     703          
Severance costs related to UK-dealership acquisitions
     —       —               (562 )     —          
Gain on sale of real estate
     1,300       —               1,300       —          
 
                                        
Adjusted SG&A(1)
   $ 175,225     $ 162,466       7.9 %   $ 518,481     $ 467,516       10.9 %
 
                                                
SG&A AS % REVENUES:
                                                
 
                                                
Unadjusted
     11.9 %     13.0 %             12.8 %     13.8 %        
Adjusted(1)
     12.0 %     13.0 %             12.7 %     13.9 %        
 
                                                
SG&A AS % OF GROSS PROFIT:
                                                
 
                                                
Unadjusted
     76.0 %     76.6 %             79.2 %     79.7 %        
Adjusted(1)
     76.6 %     76.6 %             78.6 %     79.8 %        
 
                                                

 

 

                                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2010     2009     % Change     2010     2009     % Change  
OPERATING MARGIN:
                                                
 
                                                
Unadjusted
     3.2 %     3.4 %             2.8 %     2.9 %        
Adjusted(1), (8)
     3.2 %     3.4 %             3.0 %     2.9 %        
 
                                                
PRETAX MARGIN:
                                                
 
                                                
Unadjusted
     2.1 %     2.2 %             1.6 %     1.7 %        
Adjusted(1), (9)
     2.1 %     2.2 %             1.9 %     1.6 %        
                                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2010     2009     % Change     2010     2009     % Change  
CASH FLOWS FROM OPERATING ACTIVITIES RECONCILIATION:
                                                
Net cash provided by (used in) operating activities
   $ 1,691     $ 138,560       (98.8) %   $ (54,360 )   $ 464,772       (111.7) %
Change in floorplan notes payable-credit facility, excluding floorplan offset account
     52,865       (83,806 )             164,809       (364,109 )        
 
                                        
Adjusted net cash provided by operating activities(1)
   $ 54,556     $ 54,754       (0.4) %   $ 110,449     $ 100,663       9.7 %
 
(1)   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.
 
(2)   Adjustments are net of tax benefit of $606 and $1,138 for the three and nine months ended September 30, 2010, and $241 and $1,111 for the three and nine months ended September 30, 2009, respectively, calculated utilizing the applicable federal and state tax rates for the adjustment.
 
(3)   Adjustment is net of a tax benefit of $203 for the nine months ended September 30, 2009, calculated utilizing the applicable federal and state tax rates for the adjustment.
 
(4)   Adjustments are net of tax benefit of $1,355 for the nine months ended September 30, 2010 and tax provision of $252 for the nine months ended September 30, 2009, calculated utilizing the applicable federal and state tax rates for the adjustment.
 
(5)   Adjustments are net of tax benefit of $1,414 for the nine months ended September 30, 2010 and tax provision of $205 and $3,446 for the three and nine months ended September 30, 2009, respectively, calculated utilizing the applicable federal and state tax rates for the adjustment.
 
(6)   Adjustment is net of a tax benefit of $157 for the nine months ended September 30, 2010, calculated utilizing the applicable UK corporate tax rate for the adjustment.
 
(7)   Adjustment is net of a tax provision of $539 for the three and nine months ended September 30, 2010, calculated utilizing the applicable federal and state tax rate for the adjustment.
 
(8)   Excludes the impact of non-cash asset impairment charges, gain/loss on dealership dispositions, severance costs related to UK-dealership acquisitions, and gain/loss on sale of real estate.
 
(9)   Excludes the impact of non-cash asset impairment charges, mortgage debt refinance charges, gain/loss on dealership dispositions, gain/loss on debt redemption, severance costs related to UK-dealership acquisitions, and gain/loss on sale of real estate.
 
(10)   The sum of the quarterly income per share amounts may not equal the year-to-date amount reported, as per share amounts are computed independently for each quarter and for the year-to-date, based on the respective weighted average common shares outstanding.