Excluding Prior Year Gain, Income from Continuing Operations Per Share Increases 18% to $0.33 ____________________________________________________________
BLOOMFIELD HILLS, MI, February 14, 2007 – United Auto Group, Inc. (NYSE: UAG), an international automotive retailer, today reported fourth quarter income from continuing operations of $31.1 million and related earnings per share of $0.33. Fourth quarter 2005 results included $5.2 million of after-tax earnings ($0.06 per share) attributable to the sale of all remaining variable profits relating to the pool of extended service contracts sold at the Company’s dealerships from 2001 through 2005. Excluding the extended service contract gain from the prior year results, adjusted income from continuing operations and related earnings per share increased 16.1% and 17.9%, respectively, over the comparable period in 2005. Fourth quarter net income amounted to $29.9 million and related earnings per share was $0.32.
Revenues in the fourth quarter increased 22.8% to $2.9 billion, including a 7.1% increase in same-store retail revenues. The increase in same-store revenue was highlighted by 14.5% growth in used vehicle revenues and a 6.2% increase in service and parts revenues.
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Commenting on the Company’s results, Chairman Roger Penske said, “Our business achieved solid same-store retail revenue growth during the fourth quarter, despite a difficult comparison to last year. I am pleased with the same-store results, especially in our service and parts operations which included 13.6% same-store growth in our international markets. These results highlight the benefit of our ongoing capital investment program.” Penske continued, “Our used vehicle business was exceptionally strong in the quarter, with total used vehicle revenues growing nearly 44%. The increased level of this business, coupled with a challenging marketplace, contributed to an overall decrease in gross margin percentage during the fourth quarter.”
For the year ended December 31, 2006, revenues increased 16.4% to $11.2 billion. Full-year income from continuing operations amounted to $130.6 million and related earnings per share was $1.39. Excluding the extended service contract gain noted above from the prior year results, income from continuing operations and related earnings per share increased 14.7% and 14.9%, respectively, over the comparable period in 2005.
The Company currently estimates earnings from continuing operations to be in the range of $1.40 to $1.50 per share for the year ended December 31, 2007. This estimate includes an estimated $0.02 to $0.04 per share of costs associated with developing the distribution network for the smart product launch in the United States. First quarter 2007 earnings from continuing operations are estimated to be in the range of $0.26 to $0.30 per share. These estimates exclude a $12 million, or $0.13 per share, charge to be incurred in connection with the previously announced call of the Company’s $300 million 9.625% Senior Subordinated Notes in March 2007. Earnings per share estimates are based on an estimated average of 94.6 million shares outstanding.
UnitedAuto will host a conference call discussing financial results relating to fourth quarter 2006 on Wednesday, February 14, 2007 at2:00 p.m. EDT. To listen to the conference call, participants must dial(800) 553-5275 [International, please dial (612) 332-1210]. The call will be simultaneously broadcast over the Internet through the UnitedAuto website atwww.unitedauto.com.
About UnitedAuto
United Auto Group, Inc., headquartered in Bloomfield Hills, Michigan, operates 314 retail automotive franchises, representing 41 different brands, and 26 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 169 franchises in 19 states and Puerto Rico and 145 franchises located outside the United States, primarily in the United Kingdom. UnitedAuto is a member of the Fortune 500 and Russell 1000 and has over 15,000 employees.
Statements in this press release may involve forward-looking statements. 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 that could affect UnitedAuto’s future performance which are 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 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.
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
2006
2005
Revenues:
New Vehicle
$
1,587,023
$
1,358,681
Used Vehicle
680,384
472,776
Finance and Insurance, Net
59,372
59,816
Service and Parts
327,644
265,625
Fleet and Wholesale Vehicle
226,594
189,432
Total Revenues
2,881,017
2,346,330
Cost of Sales:
New Vehicle
1,446,815
1,236,207
Used Vehicle
625,889
432,099
Service and Parts
147,654
119,047
Fleet and Wholesale Vehicle
227,862
190,316
Total Cost of Sales
2,448,220
1,977,669
Gross Profit
432,797
368,661
SG&A Expenses
350,939
284,097
Depreciation and Amortization
12,476
9,697
Operating Income
69,382
74,867
Floor Plan Interest Expense
(15,739
)
(12,460
)
Other Interest Expense
(14,702
)
(13,260
)
Equity in Earnings of Affiliates
2,695
1,093
Income from Continuing Operations Before Income Taxes and Minority Interests
41,636
50,240
Income Taxes
(9,930
)
(17,651
)
Minority Interests
(636
)
(564
)
Income from Continuing Operations
31,070
32,025
Loss from Discontinued Operations, Net of Tax
(1,171
)
(1,904
)
Net Income
$
29,899
$
30,121
Income from Continuing Operations Per Diluted Share
$
0.33
$
0.34
Diluted EPS
$
0.32
$
0.32
Diluted Weighted Average Shares Outstanding
94,389
94,374
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UNITED AUTO GROUP, INC. Consolidated Statements of Income (Amounts In Thousands, Except Per Share Data) (Unaudited)
Twelve Months
2006
2005
Revenues:
New Vehicle
$
6,275,916
$
5,601,187
Used Vehicle
2,546,009
2,025,532
Finance and Insurance, Net
249,581
229,575
Service and Parts
1,246,288
1,043,859
Fleet and Wholesale Vehicle
924,519
761,240
Total Revenues
11,242,313
9,661,393
Cost of Sales:
New Vehicle
5,727,135
5,106,889
Used Vehicle
2,330,694
1,845,587
Service and Parts
559,305
474,563
Fleet and Wholesale Vehicle
920,710
760,903
Cost of Sales
9,537,844
8,187,942
Gross Profit
1,704,469
1,473,451
SG&A Expenses
1,356,452
1,154,220
Depreciation and Amortization
44,863
37,551
Operating Income
303,154
281,680
Floor Plan Interest Expense
(61,565
)
(47,124
)
Other Interest Expense
(49,173
)
(49,004
)
Equity in Earnings of Affiliates
8,201
4,271
Income from Continuing Operations Before Income Taxes and Minority Interests
200,617
189,823
Income Taxes
(67,845
)
(68,870
)
Minority Interests
(2,172
)
(1,814
)
Income from Continuing Operations
130,600
119,139
Loss from Discontinued Operations, Net of Tax
(5,899
)
(166
)
Net Income
$
124,701
$
118,973
Income from Continuing Operations Per Diluted Share
$
1.39
$
1.27
Diluted EPS
$
1.32
$
1.27
Diluted Weighted Average Shares Outstanding
94,178
93,932
4
UNITED AUTO GROUP, INC. Consolidated Condensed Balance Sheets (Amounts In Thousands) (Unaudited)
12/31/06
12/31/05
Assets
Cash and Cash Equivalents
$
13,147
$
8,957
Accounts Receivable, Net
469,516
398,127
Inventories
1,519,506
1,144,584
Other Current Assets
71,490
50,209
Assets Held for Sale
213,030
310,467
Total Current Assets
2,286,689
1,912,344
Property and Equipment, Net
582,646
416,099
Intangibles
1,490,767
1,182,273
Other Assets
142,783
83,457
Total Assets
$
4,502,885
$
3,594,173
Liabilities and Stockholders’ Equity
Floor Plan Notes Payable
$
874,326
$
785,237
Floor Plan Notes Payable – Non-Trade
297,985
318,034
Accounts Payable and Accrued Expenses
515,111
368,874
Current Portion Long-Term Debt
3,057
3,551
Liabilities Held for Sale
52,150
189,239
Total Current Liabilities
1,742,629
1,664,935
Long-Term Debt
1,178,994
576,690
Other Long-Term Liabilities
285,609
206,816
Total Liabilities
3,207,232
2,448,441
Stockholders’ Equity
1,295,653
1,145,732
Total Liabilities and Stockholders’ Equity
$
4,502,885
$
3,594,173
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UNITED AUTO GROUP, INC. Selected Data
Fourth Quarter
Twelve Months
2006
2005
2006
2005
Total Retail Units
New Retail
43,463
38,899
183,370
167,956
Used Retail
22,529
17,109
88,723
75,348
Total Retail
65,992
56,008
272,093
243,304
Same-Store Retail Units
New Same-Store Retail
39,120
38,592
163,253
163,233
Used Same-Store Retail
18,189
16,869
75,601
72,687
Total Same-Store Retail
57,309
55,461
238,854
235,920
Same-Store Retail Revenue
New Vehicles
$
1,423,041
$
1,349,041
$
5,594,172
$
5,472,566
Used Vehicles
534,728
467,101
2,154,969
1,973,780
Finance and Insurance, Net
53,733
59,412
226,399
224,594
Service and Parts
279,247
262,988
1,091,642
1,021,030
Total Same-Store Retail
$
2,290,749
$
2,138,542
$
9,067,182
$
8,691,970
Same-Store Retail Revenue Growth
New Vehicles
5.5
%
4.5
%
2.2
%
5.8
%
Used Vehicles
14.5
%
4.6
%
9.2
%
4.4
%
Finance and Insurance, Net
(9.6
%)
(2.4
%)
0.8
%
9.7
%
Service and Parts
6.2
%
6.6
%
6.9
%
7.6
%
Revenue Mix
New Vehicles
55.1
%
57.9
%
55.8
%
58.0
%
Used Vehicles
23.6
%
20.2
%
22.6
%
21.0
%
Finance and Insurance, Net
2.1
%
2.5
%
2.2
%
2.4
%
Service and Parts
11.4
%
11.3
%
11.1
%
10.8
%
Fleet and Wholesale
7.8
%
8.1
%
8.3
%
7.8
%
Average Retail Selling Price
New Vehicles
$
36,514
$
34,928
$
34,225
$
33,349
Used Vehicles
$
30,200
$
27,633
$
28,696
$
26,882
Gross Margin
15.0
%
15.7
%
15.2
%
15.3
%
Retail Gross Margin – by Product
New Vehicle
8.8
%
9.0
%
8.7
%
8.8
%
Used Vehicle
8.0
%
8.6
%
8.5
%
8.9
%
Service and Parts
54.9
%
55.2
%
55.1
%
54.5
%
Gross Profit per Retail Transaction
New Vehicles
$
3,226
$
3,149
$
2,993
$
2,943
Used Vehicles
2,419
2,378
2,427
2,388
Finance and Insurance
900
1,068
917
944
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UNITED AUTO GROUP, INC. Selected Data (Continued)
Fourth Quarter
Twelve Months
2006
2005
2006
2005
Brand Mix:
BMW
21
%
16
%
18
%
16
%
Toyota/Lexus
20
%
22
%
21
%
23
%
Honda/Acura
14
%
15
%
16
%
15
%
DCX
12
%
12
%
11
%
12
%
Ford
9
%
9
%
10
%
9
%
Audi
7
%
7
%
7
%
7
%
General Motors
4
%
5
%
4
%
5
%
Porsche
4
%
4
%
4
%
4
%
Nissan/Infiniti
3
%
3
%
3
%
3
%
Other
6
%
7
%
6
%
6
%
100
%
100
%
100
%
100
%
Foreign / Premium
94
%
93
%
93
%
92
%
Domestic Big 3
6
%
7
%
7
%
8
%
100
%
100
%
100
%
100
%
Debt to Total Capital Ratio
48
%
34
%
48
%
34
%
Rent Expense
$
36,254
$
29,492
$
135,253
$
109,715
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