Contact: | Roger Penske | Jim Davidson | Tony Pordon | |||
Chairman 248-648-2400 | Executive VP – Finance 201-325-3303 | Vice President – Investor Relations 248-648-2540 | ||||
jdavidson@unitedauto.com | tpordon@unitedauto.com |
UNITEDAUTO NET INCOME INCREASES 28%
Revenues Increase 16%; Same-Store Retail Revenue Grows 4%
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Earnings Per Share Rises 15% to $0.70 Per Share
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BLOOMFIELD HILLS, MI, October 28, 2004 – United Auto Group, Inc. (NYSE: UAG), a FORTUNE 500 automotive specialty retailer, today announced a 28.2% rise in third quarter net income on the strength of a 16.2% increase in revenue and continued strong same-store retail revenue growth of 3.7%. The same-store growth was highlighted by a 10.7% increase in service and parts revenue, driven by increases in units in operation and capacity increases at many locations, and a 3.0% increase in new vehicle retail revenue due primarily to increases at the Company’s premium and luxury franchises.
Revenue for the quarter increased to $2.7 billion and net income increased to $32.4 million, or $0.70 per share, from $25.3 million, or $0.61 per share, in the prior year. Third quarter 2004 results include a $3.1 million after tax gain ($0.07 per share) resulting from the sale of an investment, a $1.4 million benefit ($0.03 per share) from a reduction of the Company’s estimated annual effective tax rate, and a $5.3 million after tax gain ($0.11 per share) resulting from a refund of UK consumption taxes. These gains were offset in part by $4.9 million of after tax non-cash charges ($0.11 per share) due primarily to the planned relocation of certain UK franchises as part of the Company’s ongoing facility enhancement program. Earnings per share reflects an 11.8% increase in weighted average shares outstanding.
For the nine months ended September 30, 2004, revenues increased 17.4% to $7.5 billion. Net income for the nine months increased 36.1% to $85.6 million, or $1.89 per share, from $62.9 million, or $1.52 per share, in the prior year. Nine-month 2004 results include a $7.2 million after tax gain ($0.16 per share) resulting from the sale of an investment. Prior year results include the effect of $5.0 million of after tax non-recurring charges ($0.12 per share).
Commenting on third quarter results, Chairman Roger Penske said, “Our performance during a challenging third quarter showcases the strength of our business model and further validates our capital investment and international diversification strategies. Considering the impact on our operations from severe weather in Florida, Georgia and the Carolinas, a difficult selling environment for new and pre-owned vehicles, which I expect will continue in the fourth quarter, and the 75 basis point increase in interest rates since last year, our business performed exceptionally well.”
After considering the challenging selling environment and increased interest rates, the Company currently estimates earnings in the range of $2.32 — $2.38 per share for 2004, which includes the $0.16 per share gain from the sale of an investment during the nine months ended September. Earnings per share in the fourth quarter are expected to be in the range of $0.43 - $0.49 per share. These estimates are based on an estimated average of 45.6 and 46.6 million shares outstanding for the year and the quarter, respectively, which represent increases of approximately 4.5 and 3.5 million shares, respectively, over the prior year periods.
UnitedAuto will host a conference call discussing financial results relating to third quarter 2004 on Thursday, October 28, 2004 at2 p.m. ET. To listen to the conference call, participants must dial(800) 762-4887 [International, please dial (480) 629-9026]. The call will also be simultaneously broadcast live over the Internet through the UnitedAuto website atwww.unitedauto.com.
About UnitedAuto
UnitedAuto, which has pursued a strategy based on internal growth from its existing dealerships, as well as from strategic acquisitions, operates 145 franchises in the United States and 102 franchises internationally, primarily in the United Kingdom. UnitedAuto dealerships sell new and used vehicles, and market a complete line of aftermarket automotive products and services. Statements in this press release involve forward-looking statements, including forward-looking statements regarding UnitedAuto’s future sales and earnings growth potential. Actual results may vary materially because of risks and uncertainties, including external factors such as interest rate fluctuations, changes in consumer spending and other factors over which management has no control. These forward-looking statements should be evaluated together with additional information about UnitedAuto’s business, markets, conditions and other uncertainties which could affect UnitedAuto’s future performance, which are contained in UnitedAuto’s Form 10-K for the year ended December 31, 2003 and its other filings with the Securities and Exchange Commission, and which are incorporated into this press release by reference. This press release speaks only as of its date and UnitedAuto disclaims any duty to update the information herein.
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UNITED AUTO GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)
Third Quarter | ||||||||
2004 | 2003 | |||||||
New Vehicles | $ | 1,567,701 | $ | 1,388,131 | ||||
Used Vehicles | 566,394 | 488,035 | ||||||
Finance and Insurance | 59,596 | 57,329 | ||||||
Service and Parts(a) | 265,883 | 217,489 | ||||||
Fleet | 39,102 | 25,102 | ||||||
Wholesale | 189,313 | 137,910 | ||||||
Total Revenues | 2,687,989 | 2,313,996 | ||||||
Cost of Sales | 2,308,273 | 1,981,820 | ||||||
Gross Profit | 379,716 | 332,176 | ||||||
SG&A Expenses | 296,595 | 258,878 | ||||||
Depreciation and Amortization | 14,686 | 8,106 | ||||||
Operating Income | 68,435 | 65,192 | ||||||
Floor Plan Interest Expense | (12,261 | ) | (11,053 | ) | ||||
Other Interest Expense | (10,470 | ) | (11,114 | ) | ||||
Other Income | 4,858 | — | ||||||
Income from Continuing Operations Before Minority Interests and Income Tax Provision | 50,562 | 43,025 | ||||||
Minority Interests | (676 | ) | (655 | ) | ||||
Income Tax Provision | (17,393 | ) | (16,995 | ) | ||||
Income from Continuing Operations | 32,493 | 25,375 | ||||||
Loss from Discontinued Operations, Net of Tax | (128 | ) | (120 | ) | ||||
Net Income | $ | 32,365 | $ | 25,255 | ||||
Income from Continuing Operations Per Diluted Share | $ | 0.70 | $ | 0.61 | ||||
Diluted EPS | $ | 0.70 | $ | 0.61 | ||||
Diluted Weighted Average Shares Outstanding | 46,567 | 41,637 | ||||||
(a): The Company’s parts and service departments provide preparation and reconditioning services for our dealerships’ new and used vehicle departments, for which the new and used vehicle departments are charged as if they were third parties. The Company has determined that revenue and cost of sales has not been reduced by the intracompany charge for such work performed at certain of the Company’s dealerships. Commencing with the third quarter of 2004, the Company is reducing revenue and cost of sales for intracompany charges at the identified dealerships and has revised amounts previously reported to eliminate these intracompany charges. Service and parts revenue and cost of sales have been reduced by $18 million and $22 million for the three months ended September 30, 2004 and 2003, respectively. The eliminations do not have a material impact on service and parts revenue, gross profit, operating income, income from continuing operations, net income, earnings per share, cash flows, or financial position for any period. |
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UNITED AUTO GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)
Nine Months | ||||||||
2004 | 2003 | |||||||
New Vehicles | $ | 4,284,668 | $ | 3,745,448 | ||||
Used Vehicles | 1,623,136 | 1,386,581 | ||||||
Finance and Insurance | 165,961 | 156,557 | ||||||
Service and Parts(a) | 750,737 | 606,509 | ||||||
Fleet | 106,007 | 87,523 | ||||||
Wholesale | 534,266 | 376,661 | ||||||
Total Revenues | 7,464,775 | 6,359,279 | ||||||
Cost of Sales | 6,388,234 | 5,439,118 | ||||||
Gross Profit | 1,076,541 | 920,161 | ||||||
SG&A Expenses | 848,432 | 722,140 | ||||||
Depreciation and Amortization | 32,609 | 22,644 | ||||||
Operating Income | 195,500 | 175,377 | ||||||
Floor Plan Interest Expense | (36,766 | ) | (31,201 | ) | ||||
Other Interest Expense | (31,287 | ) | (32,206 | ) | ||||
Other Income | 11,469 | — | ||||||
Income from Continuing Operations Before Minority Interests and Income Tax Provision | 138,916 | 111,970 | ||||||
Minority Interests | (1,504 | ) | (1,706 | ) | ||||
Income Tax Provision | (51,674 | ) | (44,231 | ) | ||||
Income from Continuing Operations | 85,738 | 66,033 | ||||||
Loss from Discontinued Operations, Net of Tax | (166 | ) | (123 | ) | ||||
Income Before Cumulative Effect of Accounting Change | 85,572 | 65,910 | ||||||
Cumulative Effect of Accounting Change | — | (3,058 | ) | |||||
Net Income | $ | 85,572 | $ | 62,852 | ||||
Income from Continuing Operations Per Diluted Share | $ | 1.90 | $ | 1.60 | ||||
Diluted EPS before Cumulative Effect of Accounting Change | $ | 1.89 | $ | 1.60 | ||||
Cumulative Effect of Accounting Change on Diluted EPS | — | ($0.07 | ) | |||||
Diluted EPS | $ | 1.89 | $ | 1.52 | ||||
Diluted Weighted Average Shares Outstanding | 45,198 | 41,258 | ||||||
(a): The Company’s parts and service departments provide preparation and reconditioning services for our dealerships’ new and used vehicle departments, for which the new and used vehicle departments are charged as if they were third parties. The Company has determined that revenue and cost of sales has not been reduced by the intracompany charge for such work performed at certain of the Company’s dealerships. Commencing with the third quarter of 2004, the Company is reducing revenue and cost of sales for intracompany charges at the identified dealerships and has revised amounts previously reported to eliminate these intracompany charges. Service and parts revenue and cost of sales have been reduced by $57 million and $63 million for the nine months ended September 30, 2004 and 2003, respectively. The eliminations do not have a material impact on service and parts revenue, gross profit, operating income, income from continuing operations, net income, earnings per share, cash flows, or financial position for any period. |
UNITED AUTO GROUP, INC.
Consolidated Condensed Balance Sheets
(Amounts In Thousands)
(Unaudited)
9/30/04 | 12/31/03 | |||||||
Assets | ||||||||
Cash and Cash Equivalents | $ | 17,681 | $ | 13,439 | ||||
Accounts Receivable, Net | 388,689 | 342,446 | ||||||
Inventories | 1,196,659 | 1,166,756 | ||||||
Other Current Assets | 52,486 | 43,090 | ||||||
Total Current Assets | 1,655,515 | 1,565,731 | ||||||
Property and Equipment, Net | 453,865 | 368,504 | ||||||
Intangibles | 1,233,984 | 1,085,034 | ||||||
Other Assets | 78,250 | 117,912 | ||||||
Total Assets | $ | 3,421,614 | $ | 3,137,181 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Floor Plan Notes Payable | $ | 1,090,476 | $ | 1,122,065 | ||||
Accounts Payable and Accrued Expenses | 439,729 | 347,098 | ||||||
Current Portion Long-Term Debt | 952 | 8,574 | ||||||
Total Current Liabilities | 1,531,157 | 1,477,737 | ||||||
Long-Term Debt | 682,052 | 643,145 | ||||||
Other Long-Term Liabilities | 177,124 | 187,887 | ||||||
Total Liabilities | 2,390,333 | 2,308,769 | ||||||
Stockholders’ Equity | 1,031,281 | 828,412 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 3,421,614 | $ | 3,137,181 | ||||
.
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UNITED AUTO GROUP, INC.
Selected Data
�� | ||||||||||||||||
Third Quarter | Nine Months | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Units | ||||||||||||||||
New Retail Units | 50,099 | 47,486 | 137,360 | 128,791 | ||||||||||||
Used Retail Units | 23,788 | 23,055 | 69,077 | 66,563 | ||||||||||||
Total Retail Units | 73,887 | 70,541 | 206,437 | 195,354 | ||||||||||||
Same-Store Retail Revenue | ||||||||||||||||
New Vehicles | $ | 1,406,929 | $ | 1,366,191 | $ | 3,810,260 | $ | 3,594,199 | ||||||||
Used Vehicles | 497,820 | 481,403 | 1,349,550 | 1,311,928 | ||||||||||||
Finance and Insurance | 54,776 | 56,428 | 151,139 | 151,334 | ||||||||||||
Service and Parts | 237,323 | 214,300 | 653,697 | 581,035 | ||||||||||||
Total Same-Store Retail Revenue | $ | 2,196,848 | $ | 2,118,322 | $ | 5,964,646 | $ | 5,638,496 | ||||||||
Same-Store Retail Revenue Growth | ||||||||||||||||
New Vehicles | 3.0 | % | 9.9 | % | 6.0 | % | 7.4 | % | ||||||||
Used Vehicles | 3.4 | % | 13.1 | % | 2.9 | % | 10.8 | % | ||||||||
Finance and Insurance | (2.9 | %) | 17.2 | % | (0.1 | %) | 16.2 | % | ||||||||
Service and Parts | 10.7 | % | 11.7 | % | 12.5 | % | 9.3 | % | ||||||||
Revenue Mix | ||||||||||||||||
New Vehicles | 58.3 | % | 60.0 | % | 57.4 | % | 58.9 | % | ||||||||
Used Vehicles | 21.1 | % | 21.1 | % | 21.7 | % | 21.8 | % | ||||||||
Finance and Insurance | 2.2 | % | 2.5 | % | 2.2 | % | 2.5 | % | ||||||||
Service and Parts | 9.9 | % | 9.4 | % | 10.1 | % | 9.5 | % | ||||||||
Fleet | 1.5 | % | 1.1 | % | 1.4 | % | 1.4 | % | ||||||||
Wholesale | 7.0 | % | 6.0 | % | 7.2 | % | 5.9 | % | ||||||||
Retail Gross Margin — by Product | ||||||||||||||||
New Vehicles | 8.4 | % | 8.2 | % | 8.5 | % | 8.3 | % | ||||||||
Used Vehicles | 8.7 | % | 9.3 | % | 8.9 | % | 9.3 | % | ||||||||
Finance and Insurance | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Service and Parts | 52.8 | % | 52.9 | % | 53.5 | % | 53.0 | % | ||||||||
Gross Profit per Transaction | ||||||||||||||||
New Vehicles | $ | 2,630 | $ | 2,383 | $ | 2,645 | $ | 2,422 | ||||||||
Used Vehicles | 2,061 | 1,962 | 2,091 | 1,932 | ||||||||||||
Finance and Insurance | 807 | 813 | 804 | 801 |
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UNITED AUTO GROUP, INC.
Selected Data (Continued)
Third Quarter | Nine Months | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Brand Mix: | ||||||||||||||||
Toyota/Lexus | 21 | % | 23 | % | 22 | % | 22 | % | ||||||||
BMW | 14 | % | 14 | % | 15 | % | 14 | % | ||||||||
Mercedes | 10 | % | 10 | % | 10 | % | 10 | % | ||||||||
Honda/Acura | 12 | % | 11 | % | 11 | % | 12 | % | ||||||||
General Motors | 10 | % | 10 | % | 9 | % | 11 | % | ||||||||
Ford Premier Group | 7 | % | 8 | % | 8 | % | 8 | % | ||||||||
Chrysler | 5 | % | 6 | % | 5 | % | 6 | % | ||||||||
Nissan/Infiniti | 4 | % | 5 | % | 4 | % | 5 | % | ||||||||
Ford | 4 | % | 4 | % | 4 | % | 5 | % | ||||||||
Other | 13 | % | 9 | % | 12 | % | 7 | % | ||||||||
Debt to Total Capital Ratio | 40 | % | 50 | % | 40 | % | 50 | % | ||||||||
Adjusted EBITDA(a) | $ | 75,716 | $ | 62,245 | $ | 202,810 | $ | 166,820 | ||||||||
Rent Expense | $ | 27,150 | $ | 21,246 | $ | 74,432 | $ | 60,893 |
(a) | Adjusted EBITDA is defined as income from continuing operations before minority interests, income tax provision, other interest expense, depreciation and amortization. While Adjusted EBITDA should not be construed as a substitute for income from continuing operations or as a better measure of liquidity than cash flows from operating activities, each of which is determined in accordance with U.S. GAAP, it is included in this press release to provide additional information regarding the amount of cash our business is generating. This measure may not be comparable to similarly titled measures reported by other companies. Following is a reconciliation of income from continuing operations before minority interests and income tax provision and Adjusted EBITDA: |
Third Quarter | Nine Months | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Income from continuing operations before minority interests and income tax provision | $ | 50.6 | $ | 43.0 | $ | 138.9 | $ | 112.0 | ||||||||
Other interest expense | 10.5 | 11.1 | 31.3 | 32.2 | ||||||||||||
Depreciation and amortization | 14.7 | 8.1 | 32.6 | 22.6 | ||||||||||||
Adjusted EBITDA | $ | 75.7 | $ | 62.2 | $ | 202.8 | $ | 166.8 | ||||||||
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