UNITEDAUTO REPORTS RECORD SECOND QUARTER RESULTS ____________________________________________________________
Total Revenues Increase 12%
Income From Continuing Operations Increases 15% to $36.6 Million ___________________________________________________________
Earnings Per Share From Continuing Operations Rise 15% to $0.39
Service and Parts Revenues Increase 17% ____________________________________________________________
BLOOMFIELD HILLS, MI, July 25, 2006 – United Auto Group, Inc. (NYSE: UAG), an international automotive retailer, today reported second quarter income from continuing operations of $36.6 million and related earnings per share of $0.39, representing increases of 15.2% and 14.7%, respectively, over the comparable period in 2005. Second quarter 2006 net income amounted to $36.8 million and related earnings per share was $0.39.
The Company’s revenue increased 11.8% to a record $2.9 billion during the second quarter. The revenue increase was driven by 2.9% same-store retail revenue growth, including same-store used vehicle revenue growth of 9.3% from the Company’s foreign nameplates. On an aggregate basis, same-store used vehicle revenues increased 8.5%.
UAG Chairman Roger Penske said, “UnitedAuto’s performance during the second quarter continues to highlight the strength of our brand portfolio and the continuing success of our investment strategy. Our overall service and parts revenue increased 17.3%, including 7.6% growth on a same-store basis, which contributed to a 20 basis-point increase in total gross margin to 15.2%.”
The improvement in the Company’s gross margin was due primarily to a 50 basis-point increase in service and parts from 10.4% to 10.9% of total revenues, coupled with a 36 basis-point increase in margin on service and parts revenues.
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For the six months ended June 30, 2006, revenues increased 11.7 % to $5.6 billion. Income from continuing operations for the six months increased 12.7% to $62.6 million and related earnings per share increased 11.9% to $0.66 per share. Net income for the six months increased 8.6% to $60.9, or $0.64 per share, from $56.1 million, or $0.60 per share, in the prior year. Second quarter 2005 results include $1.2 million ($0.01 per share) of after tax charges relating to severance costs associated with cost saving initiatives in certain markets.
The Company currently projects earnings from continuing operations in the third quarter in the range of $0.37 to $0.40 per share, and continues to project earnings from continuing operations for the year in the range of $1.35 to $1.40 per share. Earnings per share projections are based on an average of 94.6 million estimated shares outstanding.
UnitedAuto will host a conference call discussing financial results relating to second quarter 2006 on Tuesday, July 25, 2006 at2:00 p.m. ET. To listen to the conference call, participants must dial(866) 283-8246 [International, please dial (703) 639-1271]. 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 296 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 173 franchises in 20 states and Puerto Rico and 123 franchises located outside the United States, primarily in the United Kingdom. UnitedAuto is a member of the Fortune 500 and Russell 1000 and has approximately 15,100 employees.
Statements in this press release involve forward-looking statements, including forward-looking statements regarding UnitedAuto’s future sales and earnings potential. Actual results may vary materially because of risks and uncertainties, including external factors such as interest rate fluctuations, changes in consumer spending, energy costs 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, 2005, 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.
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UNITED AUTO GROUP, INC. Consolidated Statements of Income (Amounts In Thousands, Except Per Share Data) (Unaudited)
Second Quarter
2006
2005
Revenues:
New Vehicle
$
1,640,472
$
1,528,878
Used Vehicle
657,747
556,134
Finance and Insurance, Net
67,451
58,716
Service and Parts
319,827
272,641
Fleet and Wholesale Vehicle
246,250
205,254
Total Revenues
2,931,747
2,621,623
Cost of Sales:
New Vehicle
1,497,328
1,395,825
Used Vehicle
600,662
505,438
Service and Parts
143,820
123,596
Fleet and Wholesale Vehicle
245,800
204,838
Total Cost of Sales
2,487,610
2,229,697
Gross Profit
444,137
391,926
SG&A Expenses
345,385
305,546
Depreciation and Amortization
11,204
9,685
Operating Income
87,548
76,695
Floor Plan Interest Expense
(17,232
)
(13,142
)
Other Interest Expense
(11,495
)
(12,251
)
Income from Continuing Operations Before Minority Interests and Income Taxes
58,821
51,302
Income Taxes
(21,597
)
(18,925
)
Minority Interests
(636
)
(621
)
Income from Continuing Operations
36,588
31,756
Income from Discontinued Operations, Net of Tax
255
1,440
Net Income
$
36,843
$
33,196
Income from Continuing Operations Per Diluted Share
$
0.39
$
0.34
Diluted EPS
$
0.39
$
0.35
Diluted Weighted Average Shares Outstanding
94,636
94,082
UNITED AUTO GROUP, INC. Consolidated Statements of Income (Amounts In Thousands, Except Per Share Data) (Unaudited)
Six Months
2006
2005
Revenues:
New Vehicle
$
3,126,314
$
2,881,209
Used Vehicle
1,237,747
1,075,082
Finance and Insurance, Net
126,952
112,563
Service and Parts
627,048
536,674
Fleet and Wholesale Vehicle
465,871
394,895
Total Revenues
5,583,932
5,000,423
Cost of Sales:
New Vehicle
2,853,123
2,629,237
Used Vehicle
1,127,973
976,809
Service and Parts
282,226
244,759
Fleet and Wholesale Vehicle
462,951
393,929
Total Cost of Sales
4,726,273
4,244,734
Gross Profit
857,659
755,689
SG&A Expenses
679,895
598,191
Depreciation and Amortization
21,782
19,206
Operating Income
155,982
138,292
Floor Plan Interest Expense
(32,123
)
(25,427
)
Other Interest Expense
(23,521
)
(23,671
)
Income from Continuing Operations Before Minority Interests and Income Taxes
100,338
89,194
Income Taxes
(36,710
)
(32,905
)
Minority Interests
(1,058
)
(764
)
Income from Continuing Operations
62,570
55,525
Income (Loss) from Discontinued Operations, Net of Tax
(1,636
)
563
Net Income
$
60,934
$
56,088
Income from Continuing Operations Per Diluted Share
$
0.66
$
0.59
Diluted EPS
$
0.64
$
0.60
Diluted Weighted Average Shares Outstanding
94,499
94,050
3
UNITED AUTO GROUP, INC. Consolidated Condensed Balance Sheets (Amounts In Thousands) (Unaudited)
6/30/06
12/31/05
Assets
Cash and Cash Equivalents
$
25,623
$
9,424
Accounts Receivable, Net
405,392
411,970
Inventories, Net
1,418,891
1,213,568
Other Current Assets
76,761
50,868
Assets Held for Sale
170,984
193,937
Total Current Assets
2,097,651
1,879,767
Property and Equipment, Net
505,592
423,224
Intangibles
1,358,641
1,207,554
Other Assets
101,982
83,628
Total Assets
$
4,063,866
$
3,594,173
Liabilities and Stockholders’ Equity
Floor Plan Notes Payable
$
991,692
$
837,045
Floor Plan Notes Payable – Non-Trade
319,189
330,240
Accounts Payable and Accrued Expenses
482,461
381,118
Current Portion Long-Term Debt
3,741
3,551
Liabilities Held for Sale
107,702
112,796
Total Current Liabilities
1,904,785
1,664,750
Long-Term Debt
716,018
576,690
Other Long-Term Liabilities
216,792
207,001
Total Liabilities
2,837,595
2,448,441
Stockholders’ Equity
1,226,271
1,145,732
Total Liabilities and Stockholders’ Equity
$
4,063,866
$
3,594,173
UNITED AUTO GROUP, INC. Selected Data
Second Quarter
Six Months
2006
2005
2006
2005
Units
New Retail Units
49,472
46,589
93,602
87,605
Used Retail Units
23,577
20,872
44,704
40,851
Total Retail Units
73,049
67,461
138,306
128,456
Same-Store Retail Revenue
New Vehicles
$
1,518,823
$
1,520,879
$
2,866,926
$
2,840,158
Used Vehicles
597,032
550,507
1,128,366
1,052,351
Finance and Insurance, Net
62,858
58,161
117,880
110,389
Service and Parts
292,316
271,544
571,539
529,872
Total Same-Store Retail Revenue
$
2,471,029
$
2,401,091
4,684,711
$
4,532,770
Same-Store Retail Revenue Growth
New Vehicles
(0.1
%)
8.8
%
0.9
%
4.7
%
Used Vehicles
8.5
%
5.0
%
7.2
%
2.9
%
Finance and Insurance, Net
8.1
%
16.5
%
6.8
%
11.2
%
Service and Parts
7.6
%
9.0
%
7.9
%
8.0
%
Revenue Mix
New Vehicles
56.0
%
58.3
%
56.0
%
57.6
%
Used Vehicles
22.4
%
21.2
%
22.2
%
21.5
%
Finance and Insurance, Net
2.3
%
2.2
%
2.3
%
2.3
%
Service and Parts
10.9
%
10.4
%
11.2
%
10.7
%
Fleet and Wholesale
8.4
%
7.9
%
8.3
%
7.9
%
Gross Margin
15.2
%
15.0
%
15.4
%
15.1
%
Retail Gross Margin — by Product
New Vehicle
8.7
%
8.7
%
8.7
%
8.7
%
Used Vehicle
8.7
%
9.1
%
8.9
%
9.2
%
Service and Parts
55.0
%
54.7
%
55.0
%
54.4
%
Gross Profit per Transaction
New Vehicles
$
2,893
$
2,856
$
2,919
$
2,876
Used Vehicles
2,421
2,429
2,456
2,406
Finance and Insurance
923
870
918
876
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UNITED AUTO GROUP, INC. Selected Data (Continued)
Second Quarter
Six Months
2006
2005
2006
2005
Brand Mix:
Toyota/Lexus
21
%
22
%
21
%
22
%
BMW
16
%
15
%
16
%
15
%
Honda/Acura
16
%
15
%
16
%
15
%
DCX
11
%
12
%
11
%
12
%
Ford
10
%
9
%
11
%
9
%
Audi
7
%
7
%
7
%
7
%
General Motors
5
%
7
%
5
%
6
%
Porsche
4
%
4
%
4
%
4
%
Nissan/Infiniti
3
%
4
%
3
%
4
%
Other
7
%
5
%
6
%
6
%
Total Brand Mix:
Domestic (Detroit 3)
8
%
10
%
8
%
10
%
Foreign (incl. Premium)
92
%
90
%
92
%
90
%
Premium
59
%
58
%
60
%
58
%
Debt to Total Capital Ratio
37
%
34
%
37
%
34
%
Rent Expense
$
34,423
$
28,688
$
67,399
$
55,827
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