Exhibit 99.1
Group 1 Automotive Reports Double-Digit Increases in
Revenues and EPS for Second Quarter;
Record Revenues and Net Income for Second
Quarter and Six Months of 2003
HOUSTON--(BUSINESS WIRE)--July 31, 2003--Group 1 Automotive, Inc.
(NYSE:GPI), a Fortune 500 specialty retailer, today reported record
second-quarter net income of $20.0 million, or $0.86 per diluted
share, on record revenues of $1.1 billion for the three months ended
June 30, 2003.
"Our solid second-quarter performance demonstrates the flexibility
of our business model," said B.B. Hollingsworth Jr., Group 1's
chairman, president and chief executive officer. "Facing a slightly
less robust automobile retail environment, we dealt with declining
vehicle sales and delivered earnings growth and gross margin
expansion. This quarter's performance keeps us on track to achieve our
goal of growing earnings per share for the sixth consecutive year."
Second-Quarter Highlights:
-- Diluted EPS increased 10.3 percent to $0.86
-- Revenues increased 11.1 percent to $1.1 billion
-- Parts & service revenues increased 21.7 percent
-- Gross margin expanded to 16.0 percent vs. 15.6 percent
Summary Results of Operations (Unaudited)
(In millions, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Revenues $1,147.9 $1,033.1 $2,177.7 $1,979.2
Gross Profit $184.2 $160.8 $353.7 $312.3
Income from Operations $40.3 $37.2 $71.7 $69.0
Net Income $20.0 $19.1 $34.8 $34.6
Diluted Earnings per Share $0.86 $0.78 $1.50 $1.42
Results for the Second Quarter
During the second quarter, revenues grew 11.1 percent to $1.1
billion from $1.0 billion during the same period last year. As the
overall automobile market declined, same store revenues fell 5.1
percent, compared with a 1.3 percent decline in the second quarter of
2002. Revenues contributed by dealerships acquired by the company
during 2002 and 2003 offset this decline.
New vehicle retail sales expanded 12.7 percent, on a unit sales
increase of 8.4 percent. Used vehicle retail sales rose 0.1 percent,
with retail unit sales 0.3 percent lower. Parts and service and
finance and insurance revenues grew 21.7 percent and 18.2 percent,
respectively.
Gross margin for the quarter increased to 16.0 percent compared
with 15.6 percent during the year-ago period, as revenues increased in
each category and the company benefited from rapid growth in its
higher-margin parts and service, and finance and insurance businesses.
Income from operations was $40.3 million versus $37.2 million, an 8.4
percent increase. Operating margin was 3.5 percent compared with 3.6
percent during the year-ago period.
Net income increased 4.4 percent to $20.0 million from $19.1
million, and diluted average shares outstanding decreased 5.0 percent
to 23.3 million. Diluted earnings per share grew 10.3 percent to $0.86
from $0.78 a year ago.
Hollingsworth noted that from a brand standpoint Lexus, Infiniti
and Honda were among the strongest performers. "We had outstanding
performances from our Los Angeles and Boston platforms," he added.
Solid Performance for Six Months
For the first six months of 2003, revenues reached $2.2 billion, a
10.0 percent increase from $2.0 billion for the same period last year.
Same store revenues fell 6.4 percent, compared with a 0.7 percent
decline in the first six months of 2002.
New vehicle revenues grew 10.2 percent on a 7.6 percent increase
in unit sales. Used vehicle retail revenues rose 1.7 percent on a
retail unit sales increase of 0.3 percent. Parts and service and
finance and insurance revenues grew 21.5 percent and 18.0 percent,
respectively. Diluted earnings per share increased 5.6 percent to
$1.50 on net income of $34.8 million, compared with $1.42 per diluted
share on net income of $34.6 million, for the first six months of
2002.
Year-to-date gross margin increased to 16.2 percent compared with
15.8 percent in the 2002 period. The shift in merchandising mix that
impacted gross margin in the second quarter had a similar effect on
the six-month period. Income from operations rose 3.9 percent to $71.7
million from $69.0 million, and the operating margin contracted to 3.3
percent compared with 3.5 percent last year.
Recent Developments
Group 1 also reported that in July 2003 its Dallas platform
completed a market consolidation in conjunction with DaimlerChysler's
Alpha Initiative. The transaction resulted in the consolidation of
three dealerships consisting of four franchises into one 100,000
square foot dealership housing Dodge, Chrysler and Jeep franchises.
This initiative is expected to result in improved operating leverage
and increased sales in the company's Dallas operations.
Management's Outlook
Group 1 expects a solid vehicle market for the balance of 2003,
although volatile at times and less robust than 2002. Based on recent
financial performance and excluding the impact of the recently
announced debt offering, the company confirmed its previously
announced range of diluted earnings per share guidance for 2003 of
$3.10 to $3.30. The impact of the proposed debt offering will depend
on its terms and timing of subsequent funding of investments. Based on
current market conditions and the net funds raised in the proposed
offering being temporarily used to pay down short-term debt, the
offering would reduce 2003 diluted earnings per share by approximately
$0.10. Earnings-per-share growth is expected to emanate from a
combination of dealership performance and acquisitions, as well as
common stock repurchases, as warranted. During the last 12 months,
Group 1 repurchased 1.1 million shares of its common stock at an
average price of $23.83. As of June 30, 2003, the company had
remaining board authorization to repurchase $22.5 million of its
common stock.
Group 1 continues to seek additional strategic tuck-in
acquisitions to augment its current markets, as well as platform
acquisitions to enter new markets, targeting to add dealerships with
aggregate annual revenues of approximately $800 million. Year to date
the company has acquired three franchises with estimated annual
revenues of $131.2 million. Hollingsworth stated, "Group 1's stable
cash flow from operations, combined with one of the strongest balance
sheets in the industry, allows us to take advantage of opportunities
to make investments that enhance shareholder value."
Second-Quarter Conference Call
Group 1 will hold a conference call to discuss the second-quarter
results at 11 a.m. ET on Thursday, July 31, 2003. The call can be
accessed live and will be available for replay over the Internet at
www.vcall.com, or through Group 1's website, www.group1auto.com, for
30 days.
About Group 1 Automotive, Inc.
Group 1 currently owns 71 automotive dealerships comprised of 112
franchises, 29 brands, and 25 collision service centers located in
California, Colorado, Florida, Georgia, Louisiana, Massachusetts, 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
This press release contains "forward-looking statements" within
the meaning of the Securities Act of 1933 and the Securities Exchange
Act of 1934. These statements include statements regarding our plans,
goals, beliefs or current expectations, including those plans, goals,
beliefs and expectations of our officers and directors with respect
to, among other things:
-- earnings per share for the year ending 2003
-- the completion of future acquisitions
-- operating cash flows and availability of capital
-- future stock repurchases
-- changes in sales volumes in the new and used vehicle and parts
and service markets
-- business trends, including incentives, new vehicle sales,
product cycles and interest rates
-- ability to adjust cost structure
-- dealership operating performance
-- the completion of announced notes offering
Any such forward-looking statements are not assurances of future
performance and involve risks and uncertainties. Actual results may
differ materially from anticipated results in the forward-looking
statements for a number of reasons, including:
-- 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 and parts and service
sales
-- the effect of adverse international developments such as war,
terrorism, political conflicts or other hostilities
-- regulatory environment, adverse legislation, or unexpected
litigation
-- our principal automobile manufacturers, especially Ford,
Toyota/Lexus, GM and DaimlerChrysler, may not continue to
produce or make available to us vehicles that are in high
demand by our customers
-- requirements imposed on us by our manufacturers may affect our
acquisitions and capital expenditures related to our
dealership facilities
-- our dealership operations may not perform at expected levels
or achieve expected improvements
-- we may not achieve expected future cost savings and our future
costs could be higher than we expected
-- available capital resources and various debt agreements may
limit our ability to complete acquisitions, complete
construction of new or expanded facilities or repurchase
shares
-- our cost of financing could increase significantly
-- new accounting standards could materially impact our reported
earnings per share
-- we may not complete additional acquisitions or the pace of
acquisitions may change
-- we may not be able to adjust our cost structure
-- we may lose key personnel
-- competition in our industry may impact our operations or our
ability to complete acquisitions
-- we may not achieve expected sales volumes from the franchises
granted to us
-- insurance costs could increase significantly
-- we may not obtain inventory of new and used vehicles and
parts, including imported inventory, at the cost or in the
volume we expect
This information and additional factors that could affect our
operating results and performance are described in our Form 10-K, set
forth 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 those factors.
All forward-looking statements attributable to us are qualified in
their entirety by this cautionary statement.
FINANCIAL TABLES TO FOLLOW
Group 1 Automotive, Inc.
Statements of Operations
(Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
REVENUES:
New vehicle retail
sales $693,454 $615,532 $1,287,208 $1,168,055
Used vehicle retail
sales 230,956 230,708 456,154 448,641
Used vehicle wholesale
sales 65,445 56,031 126,449 107,099
Parts & service 116,279 95,511 227,392 187,202
Retail finance fees 16,184 14,361 31,363 27,772
Vehicle service
contract fees 15,436 12,332 30,634 23,815
Other F&I revenues,
net 10,126 8,629 18,471 16,594
----------- ----------- ----------- -----------
Total revenues 1,147,880 1,033,104 2,177,671 1,979,178
COST OF SALES:
New vehicle retail
sales 641,983 568,006 1,193,012 1,077,957
Used vehicle retail
sales 202,782 205,046 399,840 396,517
Used vehicle wholesale
sales 67,660 57,458 130,459 109,821
Parts & service 51,239 41,831 100,696 82,611
----------- ----------- ----------- -----------
Total cost of
sales 963,664 872,341 1,824,007 1,666,906
----------- ----------- ----------- -----------
Gross Profit 184,216 160,763 353,664 312,272
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES 140,179 120,773 275,017 237,650
DEPRECIATION AND
AMORTIZATION EXPENSE 3,691 2,785 6,941 5,621
----------- ----------- ----------- -----------
Income from operations 40,346 37,205 71,706 69,001
OTHER INCOME
(EXPENSE):
Floorplan interest
expense (6,235) (4,342) (11,682) (8,732)
Other interest
expense, net (2,334) (2,452) (4,703) (5,191)
Other expense, net (63) (35) (89) (110)
----------- ----------- ----------- -----------
INCOME BEFORE INCOME
TAXES 31,714 30,376 55,232 54,968
PROVISION FOR INCOME
TAXES 11,734 11,239 20,436 20,338
----------- ----------- ----------- -----------
NET INCOME $19,980 $19,137 $34,796 $34,630
=========== =========== =========== ===========
Basic earnings per
share $0.89 $0.83 $1.55 $1.50
Diluted earnings per
share $0.86 $0.78 $1.50 $1.42
Weighted average
shares outstanding:
Basic 22,488,643 23,111,843 22,426,468 23,011,086
Diluted 23,268,506 24,503,067 23,140,289 24,322,647
OTHER DATA:
Gross margin 16.0% 15.6% 16.2% 15.8%
Operating margin 3.5% 3.6% 3.3% 3.5%
Pretax income margin 2.8% 2.9% 2.5% 2.8%
Same store revenues (5.1)% (1.3)% (6.4)% (0.7)%
Manufacturer floorplan
assistance $6,963 $6,973 $12,813 $12,646
Retail new vehicles
sold 25,463 23,486 47,640 44,255
Retail used vehicles
sold 16,167 16,221 32,479 32,380
----------- ----------- ----------- -----------
Total retail
sales 41,630 39,707 80,119 76,635
Group 1 Automotive, Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
June 30, December 31,
2003 2002
--------------- --------------
(unaudited) (audited)
ASSETS:
Current assets:
Cash $21,201 $24,333
Contracts in transit and vehicle
receivables 147,559 178,623
Inventories 699,187 622,205
Other assets 82,682 77,877
--------------- --------------
Total current assets 950,629 903,038
--------------- --------------
Property and equipment 122,219 116,270
Intangible assets 366,610 368,786
Investments and deferred costs from
insurance and vehicle
service contract sales 30,076 32,637
Other assets 4,492 3,034
--------------- --------------
Total assets $1,474,026 $1,423,765
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Floorplan notes payable $662,141 $652,538
Other interest-bearing liabilities 826 997
Accounts payable and accrued expenses 165,654 155,748
--------------- --------------
Total current liabilities 828,621 809,283
--------------- --------------
Debt 82,832 83,222
Other liabilities 38,274 38,656
--------------- --------------
Total liabilities before deferred
revenues 949,727 931,161
--------------- --------------
Deferred revenues 43,006 49,187
Stockholders' equity 481,293 443,417
--------------- --------------
Total liabilities and stockholders'
equity $1,474,026 $1,423,765
=============== ==============
OTHER DATA:
Working capital $122,008 $93,755
Current ratio 1.15 1.12
Long-term debt to capitalization 15% 16%
Last 12 months return on average equity 15% 16%
CONTACT: At Group 1:
B.B. Hollingsworth, Jr., 713-647-5700
or
Scott L. Thompson, 713-647-5700
or
Kim Paper, 713-647-5700
or
At Fleishman-Hillard:
Russell A. Johnson, 713-513-9515