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Exhibit 99.1
NEWS RELEASE GROUP 1 AUTOMOTIVE, INC.
950 Echo Lane, Suite 100 Houston, TX 77024
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AT GROUP 1: Chairman, President and CEO B.B. Hollingsworth, Jr. (713) 647-5700
SVP, CFO and Treasurer Robert T. Ray (713) 647-5700
Manager, Investor Relations Kim Paper Canning (713) 647-5700
AT Fleishman-Hillard: Investors/Media Russell A. Johnson (713) 513-9515
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FOR IMMEDIATE RELEASE
THURSDAY, JULY 15, 2004
GROUP 1 AUTOMOTIVE REVISES 2004 OUTLOOK; REACHES ACQUISITION REVENUE
TARGET OF $1 BILLION
ACQUISITIONS PARTIALLY OFFSET OPERATING WEAKNESS
HOUSTON, JULY 15, 2004 -- GROUP 1 AUTOMOTIVE, INC. (NYSE: GPI), a Fortune 500
specialty retailer, today revised its outlook for 2004 and announced that it
recently completed the acquisition of three dealerships in Houston and Beverly
Hills, Calif., with total annual revenues of approximately $315 million.
The company expects full-year earnings per diluted share in the range of $2.95
to $3.15, or about 8 percent below the previous range of $3.20 to $3.40 provided
by the company in April. This revised outlook excludes the $0.17 per diluted
share charge from the March 2004 notes redemption but includes the accretive
impact of all completed acquisitions, including those noted above. It also
includes the results of what the company expects to be a relatively weak second
quarter, as described below, as well as slightly improved performance for the
balance of the year versus the first half.
The company expects to report earnings per diluted share of $0.65 to $0.69 for
the second quarter ended June 30, 2004. These results include a charge of
approximately $0.08 per diluted share related to a recent hailstorm that damaged
or destroyed more than 1,000 vehicles, or about 95 percent of the inventory, at
the company's Gene Messer dealerships in Amarillo, Texas. The charge reflects
not only the company's required deductibles, but also the amount of financial
risk retained by the company on its property and casualty insurance. The
second-quarter results also reflect what the company considers to be a
challenging market for new vehicle sales. This has resulted in
less-than-expected performance at certain of its dealerships, particularly its
Ford and Toyota dealerships, that together comprise about 40 percent of the
company's new vehicle sales.
"While we are disappointed by these results, our luxury and certain other
dealership franchises are performing well, and we remain committed to our
strategy of acquiring well-managed, accretive operations," said B.B.
Hollingsworth Jr., Group 1's chairman, president and chief executive officer.
"Although we have funded a portion of our recent acquisitions with debt, we
continue to maintain one of the strongest balance sheets in our industry, which
keeps us poised for solid, profitable growth."
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GROUP 1 AUTOMOTIVE, INC.
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GROUP 1 COMPLETES ACQUISITIONS IN TEXAS AND CALIFORNIA
The dealerships acquired by Group 1 in Texas and California are comprised of
BMW, Mercedes-Benz and Maybach franchises with total annual revenues of
approximately $315 million. Total consideration paid for both transactions was
approximately $77.5 million in cash, net of cash received.
Group 1 has expanded its brand offerings in the Houston market by acquiring
Advantage BMW Downtown and its satellite store, Advantage BMW Clear Lake. These
dealerships will operate under the company's existing Houston-area platform, the
Sterling McCall Automotive Group, that also includes Toyota, Lexus, Nissan,
Honda and Acura franchises.
In a separate transaction, Group 1 also acquired Mercedes-Benz of Beverly Hills,
an award-winning dealership that offers both Mercedes-Benz and its ultra-luxury
Maybach brand. The dealership augments the company's existing Los Angeles-area
platform, the Miller Automotive Group. Including the Beverly Hills dealership,
Miller Automotive now operates eight dealerships consisting of nine import
franchises in the Los Angeles area.
"These tuck-in acquisitions will be immediately accretive to earnings and will
further expand Group 1's offerings of luxury brands in markets with strong
demand for these vehicles," said Hollingsworth. "With the addition of the
Mercedes-Benz and Maybach franchises in Beverly Hills, the company is gaining a
significant presence in one of the largest luxury automobile markets in the
United States."
Year to date, Group 1 has added 19 franchises with expected annual revenues of
approximately $1.0 billion. The aggregate consideration paid in completing these
acquisitions was approximately $172.0 million in cash, net of cash received, and
360,693 shares of Group 1 common stock. The brand mix of these franchises, based
on expected revenues, consists of 24 percent domestics and 76 percent imports,
including 39 percent luxury brands. The cash portion of these transactions was
funded with a combination of cash on hand and borrowings under the company's
revolving credit facility.
"We have now reached our full-year acquisition target of $1 billion of expected
aggregate annual revenues," stated Hollingsworth. "We continue to find qualified
candidates that meet our stringent criteria and will continue our disciplined
approach to acquisitions during the second half of the year, although at a
slower pace than in the first half of the year."
The company will release financial results for the second quarter ended June 30,
2004, prior to the market opening on Thursday, July 29, 2004, and will host a
conference call to discuss the results later that morning at 10 a.m. EDT. Until
then, the company's second-quarter results are subject to the completion of its
customary quarter-end closing and review procedures.
ABOUT GROUP 1 AUTOMOTIVE, INC.
Group 1 currently owns 91 automotive dealerships comprised of 137 franchises, 31
brands and 31 collision service centers located in California, Colorado,
Florida, Georgia, Louisiana, Massachusetts, New Jersey, New Mexico, Oklahoma and
Texas. Through its dealerships and Internet sites, the company sells new and
used cars and light trucks; arranges related financing, vehicle service and
insurance contracts; provides maintenance and repair services; and sells
replacement parts.
GROUP 1 AUTOMOTIVE CAN BE REACHED ON THE INTERNET AT WWW.GROUP1AUTO.COM.
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GROUP 1 AUTOMOTIVE, INC.
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This press release contains "forward-looking statements" within the meaning of
the Securities Act of 1933 and the Securities Exchange Act of 1934. These
forward-looking statements include statements regarding our plans, goals,
beliefs and current expectations, including those plans, goals, beliefs and
expectations of our officers and directors with respect to, among other things:
o our future operating performance
o the accretive impact of acquisitions
o the future revenues of acquired dealerships
o the completion of future acquisitions
Any such forward-looking statements are not assurances of future performance and
involve risks and uncertainties. Actual results may differ materially from
anticipated results expressed or implied in the forward-looking statements for a
number of reasons, including:
o the future economic environment, including consumer confidence,
interest rates, the level of manufacturer incentives and the
availability of consumer credit may affect the demand for new and
used vehicles, replacement parts, maintenance and repair services,
and finance and insurance products
o adverse international developments such as war, terrorism, political
conflicts or other hostilities may adversely affect the demand for
our products and services
o the future regulatory environment, adverse legislation, or
unexpected litigation may impose additional costs on us or otherwise
adversely affect us
o our principal automobile manufacturers, especially Toyota/Lexus,
Ford, DaimlerChrysler, General Motors and Nissan/Infiniti, may not
continue to produce or make available to us vehicles that are in
high demand by our customers
o requirements imposed on us by our manufacturers may affect our
ability to complete acquisitions and the level of capital
expenditures related to our dealership facilities
o our dealership operations may not perform at expected levels or
achieve expected improvements
o we may not achieve expected future cost savings and our future costs
could be higher than we expect
o available capital resources and various debt agreements may limit
our ability to complete acquisitions, complete construction of new
or expanded facilities or repurchase shares
o our cost of financing could increase significantly
o new accounting standards could materially impact our reported
earnings per share
o we may not complete additional acquisitions or the pace of
acquisitions may change
o we may not be able to adjust our cost structure to any reduction in
the demand for our products and services
o we may lose key personnel
o competition in our industry may impact our operations or our ability
to complete acquisitions
o we may not achieve expected sales volumes from the franchises
granted to us
o insurance costs could increase significantly
o we may not obtain inventory of new and used vehicles and parts,
including imported inventory, at the cost or in the volume we expect
These factors, as well as additional factors that could affect our operating
results and performance, are described in our Form 10-K under the headings
"Business-Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations." We urge you to carefully consider this
information.
Our quarterly financial results are subject to our customary financial closing
and review procedures, and reported results could vary from our revised
expectations. We undertake no duty to update our forward-looking statements,
including our earnings outlook.
All forward-looking statements attributable to us are qualified in their
entirety by this cautionary statement.