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
3
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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