Contact: | Jim Davidson | Tony Pordon | ||
Executive VP – Finance 201-325-3303 | Senior VP – Investor Relations 248-648-2540 | |||
jdavidson@unitedauto.com | tpordon@unitedauto.com | |||
UNITEDAUTO REPORTS FOURTH QUARTER RESULTS
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Income From Continuing Operations Increases 13% to $31.6 Million
Income From Continuing Operations Rises 12% to $0.67 per share
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Total Revenues Increase 7%
Same-Store Retail Revenues Increase 4%
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BLOOMFIELD HILLS, MI, February 14, 2006 – United Auto Group, Inc. (NYSE: UAG), an international automotive retailer, today reported fourth quarter income from continuing operations of $31.6 million and related earnings per share of $0.67, representing increases of 12.9% and 11.7%, respectively, over the comparable period in 2004. Fourth quarter 2005 results include $5.2 million of after-tax earnings ($0.11 per share) attributable to the sale of all the remaining variable profits relating to the pool of extended service contracts sold at the Company’s dealerships over the past five years. Fourth quarter net income amounted to $30.1 million and related earnings per share was $0.64, representing increases of 15.3% and 14.3%, respectively.
Revenues in the fourth quarter increased 7.5% to $2.5 billion, including a 3.9% increase in same-store retail revenues, and gross margin improved to 15.7%, including increases in margins of new vehicle, used vehicle and service and parts revenues. The increase in same-store revenue was highlighted by 9.0% growth in service and parts revenues at the Company’s dealerships in the U.S. and a 7.5% increase in same-store retail revenues at the Company’s dealerships located outside the U.S.
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For the year ended December 31, 2005, revenues increased 13.9% to $10.2 billion. Full year income from continuing operations amounted to $120.7 million and related earnings per share was $2.57, representing increases of 8.2% and 4.9%, respectively, over 2004. Results for 2005 include the earnings from the sale of the extended service contract variable profits, as well as the after-tax severance charges of $1.2 million ($0.03 per share) recorded in the second quarter. Full year 2004 results include $7.2 million ($0.16 per share) of after-tax earnings resulting from the sale of an investment. Adjusted for these items, income from continuing operations and related earnings per share amounted to $116.7 million and $2.49 per share, representing increases of 11.8% and 8.7%, respectively, over the comparable period in 2004.
Commenting on the Company’s results, Chairman Roger Penske said, “We continue to be pleased with the performance of our business, despite the challenging retail environment during most of the quarter. We believe our strategies, including the strength of our brand mix, our geographical diversity, and our commitment to increasing the service and parts component of UAG’s business, remain key differentiators of our Company and an integral part of the Company’s success.”
Penske continued, “2005 was another outstanding year for UnitedAuto. We strengthened our brand mix, added new franchises in important growth markets, and increased our gross margin by 29 basis points to 15.2%. In addition, our recently completed $375 million convertible note offering lowers our overall cost of capital, fixes the interest rate on a significant portion of our debt in a time of rising interest rates, and leaves us with significant financial flexibility to pursue our growth objectives.”
After considering volatile energy prices, the challenging selling environment and the impact of our recent convertible note offering, the Company currently estimates earnings from continuing operations to be in the range of $2.70 to $2.80 per share for the year ended December 31, 2006, and in the range of $0.53 to $0.57 per share for the first quarter 2006. These estimates are based on an estimated average of 47.0 million shares outstanding.
UnitedAuto will host a conference call discussing financial results relating to fourth quarter 2005 on Tuesday, February 14, 2006 at2:00 p.m. ET. To listen to the conference call, participants must dial(800) 230-1092 [International, please dial (612) 288-0318]. The call will be simultaneously broadcast live over the Internet through the UnitedAuto website atwww.unitedauto.com.
About UnitedAuto
United Auto Group, Inc., headquartered in Bloomfield Hills, Michigan, operates 297 retail automotive franchises, representing 40 different brands, and 27 collision repair centers. UnitedAuto, which sells new and previously owned vehicles, finance and insurance products and replacement parts, and offers maintenance and repair services on all brands it represents, has 171 franchises in 19 states and Puerto Rico and 126 franchises located internationally, primarily in the United Kingdom. UnitedAuto is a member of the Fortune 500 and Russell 2000 and has approximately 14,000 employees.
Statements in this press release involve forward-looking statements, including forward-looking statements regarding UnitedAuto’s future sales 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, market conditions, and other uncertainties which could affect UnitedAuto’s future performance, which is contained in UnitedAuto’s Form 10-K for the year ended December 31, 2004, and its other filings with the Securities and Exchange Commission, and which is 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.
This release contains certain non-GAAP financial measures as defined under SEC rules, such as adjusted income from continuing operations and related earnings per share, which exclude certain items disclosed in the release. The Company has reconciled these measures to the most directly comparable GAAP measures in the release. The Company believes that these non-GAAP financial measures improve the transparency of the Company’s disclosure and the period-to-period comparability of the Company’s results from operations.
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UNITED AUTO GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)
Fourth Quarter | ||||||||
2005 | 2004 | |||||||
Revenues: | ||||||||
New Vehicle | $ | 1,418,442 | $ | 1,336,355 | ||||
Used Vehicle | 500,733 | 470,054 | ||||||
Finance and Insurance, Net | 61,501 | 61,972 | ||||||
Service and Parts | 279,043 | 249,611 | ||||||
Fleet and Wholesale Vehicle | 197,518 | 168,483 | ||||||
Total Revenues | 2,457,237 | 2,286,475 | ||||||
Cost of Sales: | ||||||||
New Vehicle | 1,291,419 | 1,218,484 | ||||||
Used Vehicle | 457,312 | 430,911 | ||||||
Service and Parts | 125,210 | 113,612 | ||||||
Fleet and Wholesale Vehicle | 198,700 | 168,612 | ||||||
Total Cost of Sales | 2,072,641 | 1,931,619 | ||||||
Gross Profit | 384,596 | 354,856 | ||||||
SG&A Expenses | 298,012 | 277,228 | ||||||
Depreciation and Amortization | 10,148 | 8,786 | ||||||
Operating Income | 76,436 | 68,842 | ||||||
Floor Plan Interest Expense | (13,447 | ) | (11,671 | ) | ||||
Other Interest Expense | (13,402 | ) | (11,686 | ) | ||||
Income from Continuing Operations Before Minority Interests and Income Taxes | 49,587 | 45,485 | ||||||
Minority Interests | (564 | ) | (556 | ) | ||||
Income Taxes | (17,410 | ) | (16,924 | ) | ||||
Income from Continuing Operations | 31,613 | 28,005 | ||||||
Loss from Discontinued Operations, Net of Tax | (1,492 | ) | (1,890 | ) | ||||
Net Income | $ | 30,121 | $ | 26,115 | ||||
Income from Continuing Operations Per Diluted Share | $ | 0.67 | $ | 0.60 | ||||
Diluted EPS | $ | 0.64 | $ | 0.56 | ||||
Diluted Weighted Average Shares Outstanding | 47,187 | 46,689 | ||||||
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UNITED AUTO GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)
Twelve Months | ||||||||
2005 | 2004 | |||||||
Revenues: | ||||||||
New Vehicle | $ | 5,900,326 | $ | 5,195,728 | ||||
Used Vehicle | 2,148,582 | 1,929,230 | ||||||
Finance and Insurance, Net | 237,843 | 209,467 | ||||||
Service and Parts | 1,100,241 | 938,090 | ||||||
Fleet and Wholesale Vehicle | 803,292 | 675,983 | ||||||
Total Revenues | 10,190,284 | 8,948,498 | ||||||
Cost of Sales: | ||||||||
New Vehicle | 5,384,406 | 4,746,894 | ||||||
Used Vehicle | 1,956,066 | 1,764,080 | ||||||
Service and Parts | 500,316 | 431,805 | ||||||
Fleet and Wholesale Vehicle | 804,152 | 674,856 | ||||||
Cost of Sales | 8,644,940 | 7,617,635 | ||||||
Gross Profit | 1,545,344 | 1,330,863 | ||||||
SG&A Expenses | 1,213,259 | 1,036,521 | ||||||
Depreciation and Amortization | 39,388 | 37,910 | ||||||
Operating Income | 292,697 | 256,432 | ||||||
Floor Plan Interest Expense | (50,922 | ) | (44,033 | ) | ||||
Other Interest Expense | (49,540 | ) | (42,969 | ) | ||||
Other Income | — | 11,469 | ||||||
Income from Continuing Operations Before Minority Interests and Income Taxes | 192,235 | 180,899 | ||||||
Minority Interests | (1,814 | ) | (2,047 | ) | ||||
Income Taxes | (69,760 | ) | (67,290 | ) | ||||
Income from Continuing Operations | 120,661 | 111,562 | ||||||
Income (Loss) from Discontinued Operations, Net of Tax | (1,688 | ) | 125 | |||||
Net Income | $ | 118,973 | $ | 111,687 | ||||
Income from Continuing Operations Per Diluted Share | $ | 2.57 | $ | 2.45 | ||||
Diluted EPS | $ | 2.53 | $ | 2.45 | ||||
Diluted Weighted Average Shares Outstanding | 46,966 | 45,613 | ||||||
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UNITED AUTO GROUP, INC.
Consolidated Condensed Balance Sheets
(Amounts In Thousands)
(Unaudited)
12/31/05 | 12/31/04 | |||||||
Assets | ||||||||
Cash and Cash Equivalents | $ | 9,424 | $ | 23,547 | ||||
Accounts Receivable, Net | 412,861 | 342,174 | ||||||
Inventories | 1,224,443 | 1,180,769 | ||||||
Other Current Assets | 51,142 | 43,095 | ||||||
Assets of Discontinued Operations | 181,775 | 284,614 | ||||||
Total Current Assets | 1,879,645 | 1,874,199 | ||||||
Property and Equipment, Net | 424,429 | 374,678 | ||||||
Intangibles | 1,206,471 | 1,197,044 | ||||||
Other Assets | 83,628 | 86,880 | ||||||
Total Assets | $ | 3,594,173 | $ | 3,532,801 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Floor Plan Notes Payable | $ | 845,251 | $ | 807,204 | ||||
Floor Plan Notes Payable – Non-Trade | 331,953 | 315,634 | ||||||
Accounts Payable and Accrued Expenses | 386,739 | 395,750 | ||||||
Current Portion Long-Term Debt | 3,551 | 11,367 | ||||||
Liabilities of Discontinued Operations | 97,256 | 173,774 | ||||||
Total Current Liabilities | 1,664,750 | 1,703,729 | ||||||
Long-Term Debt | 576,690 | 574,933 | ||||||
Other Long-Term Liabilities | 207,001 | 179,104 | ||||||
Total Liabilities | 2,448,441 | 2,457,766 | ||||||
Stockholders’ Equity | 1,145,732 | 1,075,035 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 3,594,173 | $ | 3,532,801 | ||||
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UNITED AUTO GROUP, INC.
Selected Data
Fourth Quarter | Twelve Months | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Units | ||||||||||||||||
New Retail Units | 40,864 | 40,056 | 178,157 | 161,221 | ||||||||||||
Used Retail Units | 18,407 | 18,161 | 81,437 | 76,308 | ||||||||||||
Total Retail Units | 59,271 | 58,217 | 259,594 | 237,529 | ||||||||||||
Same-Store Retail Revenue | ||||||||||||||||
New Vehicles | $ | 1,372,707 | $ | 1,327,553 | $ | 5,157,216 | $ | 4,908,989 | ||||||||
Used Vehicles | 486,823 | 463,945 | 1,891,521 | 1,817,051 | ||||||||||||
Finance and Insurance, Net | 60,112 | 61,674 | 220,221 | 201,689 | ||||||||||||
Service and Parts | 263,286 | 247,418 | 948,862 | 881,982 | ||||||||||||
Total Same-Store Retail Revenue | $ | 2,182,928 | $ | 2,100,590 | $ | 8,217,820 | $ | 7,809,711 | ||||||||
Same-Store Retail Revenue Growth | ||||||||||||||||
New Vehicles | 3.4 | % | 6.7 | % | 5.1 | % | 6.1 | % | ||||||||
Used Vehicles | 4.9 | % | 7.8 | % | 4.1 | % | 5.8 | % | ||||||||
Finance and Insurance, Net | (2.5 | %) | 37.6 | % | 9.2 | % | 10.2 | % | ||||||||
Service and Parts | 6.4 | % | 12.7 | % | 7.6 | % | 13.3 | % | ||||||||
Revenue Mix | ||||||||||||||||
New Vehicles | 57.7 | % | 58.4 | % | 57.9 | % | 58.1 | % | ||||||||
Used Vehicles | 20.4 | % | 20.6 | % | 21.1 | % | 21.6 | % | ||||||||
Finance and Insurance, Net | 2.5 | % | 2.7 | % | 2.3 | % | 2.3 | % | ||||||||
Service and Parts | 11.4 | % | 10.9 | % | 10.8 | % | 10.5 | % | ||||||||
Fleet and Wholesale | 8.0 | % | 7.4 | % | 7.9 | % | 7.5 | % | ||||||||
Retail Gross Margin — by Product | ||||||||||||||||
New Vehicles | 9.0 | % | 8.8 | % | 8.7 | % | 8.6 | % | ||||||||
Used Vehicles | 8.7 | % | 8.3 | % | 9.0 | % | 8.6 | % | ||||||||
Service and Parts | 55.1 | % | 54.5 | % | 54.5 | % | 54.0 | % | ||||||||
Gross Profit per Transaction | ||||||||||||||||
New Vehicles | $ | 3,108 | $ | 2,943 | $ | 2,896 | $ | 2,784 | ||||||||
Used Vehicles | 2,359 | 2,155 | 2,364 | 2,164 | ||||||||||||
Finance and Insurance | 1,038 | 1,064 | 916 | 882 |
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UNITED AUTO GROUP, INC.
Selected Data (Continued)
Fourth Quarter | Twelve Months | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Brand Mix: | ||||||||||||||||
Toyota/Lexus | 21 | % | 23 | % | 22 | % | 24 | % | ||||||||
BMW | 16 | % | 15 | % | 15 | % | 16 | % | ||||||||
Honda/Acura | 15 | % | 14 | % | 15 | % | 12 | % | ||||||||
DCX | 12 | % | 13 | % | 12 | % | 14 | % | ||||||||
Ford | 9 | % | 9 | % | 9 | % | 10 | % | ||||||||
Audi | 7 | % | 6 | % | 7 | % | 5 | % | ||||||||
General Motors | 5 | % | 6 | % | 6 | % | 7 | % | ||||||||
Porsche | 4 | % | 4 | % | 4 | % | 3 | % | ||||||||
Nissan/Infiniti | 3 | % | 4 | % | 4 | % | 4 | % | ||||||||
Other | 8 | % | 6 | % | 6 | % | 5 | % | ||||||||
Total Brand Mix: | ||||||||||||||||
Domestic | 9 | % | 9 | % | 10 | % | 10 | % | ||||||||
Foreign (incl. Premium / Luxury) | 91 | % | 91 | % | 90 | % | 90 | % | ||||||||
Premium / Luxury | 61 | % | 59 | % | 58 | % | 57 | % | ||||||||
Debt to Total Capital Ratio | 34 | % | 35 | % | 34 | % | 35 | % | ||||||||
Rent Expense | $ | 30,950 | $ | 24,701 | $ | 115,550 | $ | 91,214 |
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