GROUP 1 AUTOMOTIVE INC - FORM 8-K - EX-99.1 - PRESS RELEASE

Attached files

file	filename
8-K - FORM 8-K - GROUP 1 AUTOMOTIVE INC	d294358d8k.htm

Exhibit 99.1

LOGO

FOR IMMEDIATE RELEASE

Group 1 Automotive Reports Record Fourth-Quarter and Best-Ever Full-Year Financial Results; Full-Year Revenues Increase to $6.1 Billion

HOUSTON, Feb. 9, 2012 — Group 1 Automotive, Inc. (NYSE: GPI), a Fortune 500 automotive retailer, today reported record fourth-quarter adjusted net income of $22.0 million, a 49.3 percent increase from the prior-year period, and adjusted diluted earnings per common share of $0.94 for the period ended Dec. 31, 2011. As shown in the attached reconciliation table, the company recognized $1.1 million net after-tax adjustments for non-cash asset impairment charges and an accrual for a pending legal matter in the quarter ended Dec. 31, 2011. Before adjusting for these items, reported net income was $20.9 million, and diluted earnings per common share were $0.90.

Full-year 2011 adjusted net income increased 38.3 percent, to a record $86.0 million. Adjusted diluted earnings per common share were $3.62, making this the best full-year results in the company’s history.

Fourth-Quarter 2011 Highlights

•

Total revenues increased 13.1 percent to $1.6 billion, and gross profit grew 13.3 percent to $245.9 million from the prior-year period.

•

New vehicle gross profit grew 23.6 percent on 13.5 percent higher revenues, as unit sales were 8.1 percent higher and the average selling price increased to $34,448.

•

Retail used vehicle gross profit grew 14.0 percent on 16.8 percent higher revenues, as the average selling price increased 3.7 percent, to $20,417, and the company retailed 12.7 percent more units.

•

Parts and service revenues increased 7.0 percent, reflecting increases in customer-pay, wholesale parts and collision businesses.

•

Finance and insurance gross profit per retail unit of $1,183 set another all-time record high for any quarter.

•

Selling, general and administrative (SG&A) expenses as a percent of gross profit (adjusted) improved 260 basis points on a comparable basis, to 76.1 percent, from the prior-year period.

•

Same-store operating margin (adjusted) improved to 3.2 percent, as higher gross profit outpaced expenses.

Full-Year 2011 Results

•

Total revenues increased 10.4 percent to $6.1 billion, and gross profit grew 9.5 percent, representing increases in all operating segments from the prior year.

•

Finance and insurance revenues increased 16.0 percent on 5.5 percent more retail unit sales; gross profit per unit of $1,135 was an all-time record.

•

Same-store new vehicle gross profit grew 15.0 percent on 6.4 percent higher revenues.

•

Same-store used vehicle gross profit was 5.6 percent higher on an 8.6 percent revenue increase.

•

Same-store parts and service revenues grew 2.5 percent.

•

Same-store SG&A expenses as a percent of gross profit (adjusted) improved 180 basis points on a comparable basis, to 76.2 percent.

“I am proud of the record fourth-quarter and full-year results that Group 1 reported today,” said Earl J. Hesterberg, Group 1’s president and chief executive officer, “especially given the supply challenges we faced with most of our Japanese brand stores for the majority of the year and in a sales environment that was about 25 percent lower than our previous record year in 2006. The strong results reflect the strength of our operating team as well as the significant improvements we have made to our operating model

Group 1 Automotive, Inc.

during the past several years. These improvements should continue to deliver operating leverage as new vehicle sales increase to a more normalized 15 million to 16 million unit selling environment in the next few years. Looking ahead, we anticipate new vehicle industry sales will increase by more than one million, to 14 million, units in 2012.”

Corporate Development Recap

During the fourth quarter, Group 1 added six franchises to its portfolio including Lincoln, Cadillac, Buick, GMC and two Volkswagen franchises that are expected to add $218.0 million in annual revenues.

For the full year 2011, Group 1 added 14 franchises with total estimated annual revenues of $563.0 million and disposed of two franchises with trailing-12-month revenues of $4.1 million in 2011.

Thus far in 2012, Group 1 has acquired Volkswagen and BMW franchises with estimated aggregate annual revenues of $93.4 million.

Fourth-Quarter Earnings Conference Call

Group 1’s senior management will host a conference call today at 10 a.m. ET to discuss the fourth-quarter financial results and the company’s outlook and strategy.

The conference call will be simulcast live on the Internet at www.group1auto.com, then click on ‘Investor Relations’ and then ‘Events’ or through this link: http://www.group1corp.com/news/events.aspx. A replay will be available for 30 days.

The conference call will also be available live by dialing in 10 minutes prior to the start of the call at:

Domestic: 1.877.317.6789

International: 1.412.317.6789

Conference ID: 10008954

A telephonic replay will be available following the call through Feb. 17 at 9 a.m. ET by dialing:

Domestic: 1.877.344.7529

International: 1.412.317.0088

Conference ID: 10008954

About Group 1 Automotive, Inc.

Group 1 owns and operates 111 automotive dealerships, 143 franchises, and 28 collision centers in the United States and the United Kingdom that offer 31 brands of automobiles. Through its dealerships, the company sells new and used cars and light trucks; arranges related vehicle financing, service and insurance contracts; provides automotive maintenance and repair services; and sells vehicle 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 Private Securities Litigation Reform Act of 1995, which are statements related to future, not past, events and are based on our current expectations and assumptions regarding our business, the economy and other future conditions. In this context, the forward-looking statements often include statements regarding our goals, plans, projections and guidance regarding our financial position, results of operations, market position, pending and potential future acquisitions and business strategy, and often contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “should,” “foresee,” “may” or “will” and similar expressions. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments

Group 1 Automotive, Inc.

affecting us will be those that we anticipate. Any such forward-looking statements are not assurances of future performance and involve risks and uncertainties that may cause actual results to differ materially from those set forth in the statements. These risks and uncertainties include, among other things, (a) general economic and business conditions, (b) the level of manufacturer incentives, (c) the future regulatory environment, (d) our ability to obtain an inventory of desirable new and used vehicles, (e) our relationship with our automobile manufacturers and the willingness of manufacturers to approve future acquisitions, (f) our cost of financing and the availability of credit for consumers, (g) our ability to complete acquisitions and dispositions and the risks associated therewith, (h) foreign exchange controls and currency fluctuations, and (i) our ability to retain key personnel. For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

SOURCE: Group 1 Automotive, Inc.

Investor contacts:

Kim Paper Canning

Manager, Investor Relations

Group 1 Automotive Inc.

713-647-5741 | kpaper@group1auto.com

Media contacts:

Pete DeLongchamps

V.P. Financial Services and Manufacturer Relations

Group 1 Automotive Inc.

713-647-5770 | pdelongchamps@group1auto.com

Clint Woods

Pierpont Communications, Inc.

713-627-2223 | cwoods@piercom.com

Group 1 Automotive, Inc.

Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended December 31,									Twelve Months Ended December 31,
	2011			2010			% Change			2011			2010			% Change
REVENUES:
New vehicle retail sales	$	945,392		$	832,714			13.5		$	3,402,647		$	3,086,807			10.2
Used vehicle retail sales		362,911			310,663			16.8			1,416,520			1,271,039			11.4
Used vehicle wholesale sales		59,434			58,877			0.9			251,043			215,530			16.5
Parts and service		204,711			191,242			7.0			813,819			767,004			6.1
Finance and insurance		53,481			44,256			20.8			195,736			168,789			16.0

Total revenues		1,625,929			1,437,752			13.1			6,079,765			5,509,169			10.4

COST OF SALES:
New vehicle retail sales		888,252			786,479			12.9			3,192,309			2,909,012			9.7
Used vehicle retail sales		333,902			285,212			17.1			1,291,996			1,156,035			11.8
Used vehicle wholesale sales		59,312			59,268			0.1			246,963			212,833			16.0
Parts and service		98,602			89,772			9.8			387,897			354,256			9.5

Total cost of sales		1,380,068			1,220,731			13.1			5,119,165			4,632,136			10.5


GROSS PROFIT		245,861			217,021			13.3			960,600			877,033			9.5

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		188,109			170,839			10.1			735,229			693,635			6.0

DEPRECIATION AND AMORTIZATION EXPENSE		7,182			6,519			10.2			27,063			26,455			2.3

ASSET IMPAIRMENTS		797			7,719			(89.7	)		4,805			10,840			(55.7	)

OPERATING INCOME		49,773			31,944			55.8			193,503			146,103			32.4

OTHER EXPENSE:
Floorplan interest expense		(7,442	)		(8,890	)		(16.3	)		(27,687	)		(34,110	)		(18.8	)

Other interest expense, net		(8,911	)		(6,952	)		28.2			(33,722	)		(27,217	)		23.9

Loss on redemption of long-term debt		—			—			—			—			(3,872	)		(100.0	)


INCOME BEFORE INCOME TAXES		33,420			16,102			107.6			132,094			80,904			63.3

PROVISION FOR INCOME TAXES		(12,565	)		(5,533	)		127.1			(49,700	)		(30,600	)		62.4


NET INCOME	$	20,855		$	10,569			97.3		$	82,394		$	50,304			63.8


DILUTED INCOME PER COMMON SHARE	$	0.90		$	0.45			101.0		$	3.47		$	2.09			65.8

Weighted average dilutive common shares outstanding		22,040			22,467			(1.9	)		22,409			22,788			(1.7	)
Weighted average participating securities		1,276			1,284			(0.6	)		1,377			1,284			7.3

Total weighted average shares outstanding		23,316			23,751			(1.8	)		23,786			24,072			(1.2	)

- 4 -

Group 1 Automotive, Inc.

Consolidated Balance Sheets

(Dollars in thousands)


	December 31, 2011			December 31, 2010			% Change
	(Unaudited)
ASSETS:

CURRENT ASSETS:
Cash and cash equivalents	$	14,895		$	19,843			(24.9	)
Contracts in transit and vehicle receivables, net		167,507			113,846			47.1
Accounts and notes receivable, net		92,775			75,623			22.7
Inventories		867,470			777,771			11.5
Deferred income taxes		16,012			14,819			8.1
Prepaid expenses and other current assets		16,925			17,332			(2.3	)

Total current assets		1,175,584			1,019,234			15.3
PROPERTY AND EQUIPMENT, net		585,633			506,288			15.7
GOODWILL AND INTANGIBLE FRANCHISE RIGHTS		702,145			666,656			5.3
OTHER ASSETS		12,981			9,786			32.6

Total assets	$	2,476,343		$	2,201,964			12.5


LIABILITIES AND STOCKHOLDERS’ EQUITY:

CURRENT LIABILITIES:
Floorplan notes payable - credit facility	$	718,945		$	690,051			4.2
Offset account related to floorplan notes payable - credit facility		(109,207	)		(129,211	)		(15.5	)
Floorplan notes payable - manufacturer affiliates		155,980			103,345			50.9
Current maturities of long-term debt		14,663			53,189			(72.4	)
Current liabilities from interest rate risk management activities		7,273			1,098			562.4
Accounts payable		148,048			92,799			59.5
Accrued expenses		109,245			83,663			30.6

Total current liabilities		1,044,947			894,934			16.8
2.25% CONVERTIBLE SENIOR NOTES (aggregate principal of $182,753 at December 31, 2011 and December 31, 2010)		144,985			138,155			4.9
		144,985			138,155			4.9
3.00% CONVERTIBLE SENIOR NOTES (aggregate principal of $115,000 at December 31, 2011 and December 31, 2010)		77,401			74,365			4.1
MORTGAGE FACILITY, net of current maturities		38,873			—			100.0
OTHER REAL ESTATE RELATED AND LONG-TERM DEBT, net of current maturities		184,237			161,611			14.0
CAPITAL LEASE OBLIGATIONS RELATED TO REAL ESTATE, net of current maturities		37,105			38,819			(4.4	)
DEFERRED INCOME TAXES		78,459			58,970			33.0
LIABILITIES FROM INTEREST RATE RISK MANAGEMENT ACTIVITIES		26,766			16,426			62.9
OTHER LIABILITIES		36,470			34,316			6.3
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY:
Common stock		260			261			(0.4	)
Additional paid-in capital		363,375			363,966			(0.2	)
Retained earnings		591,037			519,843			13.7
Accumulated other comprehensive loss		(29,236	)		(18,755	)		55.9
Treasury stock		(118,336	)		(80,947	)		46.2

Total stockholders’ equity		807,100			784,368			2.9

Total liabilities and stockholders’ equity	$	2,476,343		$	2,201,964			12.5

- 5 -

Group 1 Automotive, Inc.

Consolidated Statements of Adjusted Cash Flows from Operating Activities

(Unaudited)

(In thousands)


	Three Months Ended December 31,									Twelve Months Ended December 31,
	2011			2010			% Change			2011			2010			% Change

Net income	$	20,855		$	10,569			97.3		$	82,394		$	50,304			63.8
Adjustments to reconcile net income to net cash provided by operating activities:
Asset impairments		797			7,719			(89.7	)		4,805			10,840			(55.7	)
Depreciation and amortization		7,182			6,519			10.2			27,063			26,455			2.3
Deferred income taxes		8,544			1,050			713.7			24,824			23,274			6.7
Loss on redemption of long-term debt		—			—			—			—			3,872			(100.0	)
(Gain) loss on disposition of assets and franchise		6			(2,322	)		100.3			(961	)		848			(213.3	)
Stock-based compensation		2,586			2,437			6.1			10,919			9,942			9.8
Amortization of debt discount and issue costs		3,119			3,986			(21.8	)		11,990			10,322			16.2
Other		292			(30	)		1,073.3			277			824			(66.4	)
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Accounts payable and accrued expenses		37,305			6,506			473.4			77,027			16,130			377.5
Accounts and notes receivable		(21,783	)		(9,097	)		139.5			(17,875	)		(13,844	)		29.1
Inventories		(119,114	)		(21,302	)		459.2			(7,410	)		(174,249	)		(95.7	)
Contracts-in-transit and vehicle receivables		(67,346	)		(21,330	)		215.7			(53,821	)		(27,218	)		97.7
Prepaid expenses and other assets		(7,792	)		(138	)		5,546.4			(11,246	)		6,922			(262.5	)
Floorplan notes payable - credit facility ⁽¹⁾		143,307			33,350			329.7			(13,350	)		193,430			(106.9	)
Floorplan notes payable - manufacturer affiliates ⁽²⁾		26,595			(299	)		8,994.6			19,045			(12,790	)		248.9
Deferred revenues		(182	)		(549	)		(66.8	)		(1,427	)		(2,308	)		(38.2	)

Adjusted net cash provided by operating activities	$	34,371		$	17,069			101.4		$	152,254		$	122,754			24.0

⁽¹⁾	Excludes net acquisition/(disposition) related activity of $41,860 for the twelve months ended December 31, 2011, and $4,729 for the twelve months ended December 31, 2010.

⁽²⁾	Excludes net acquisition/(disposition) related activity of $33,712 for the twelve months ended December 31, 2011, and $2,210 for the twelve months ended December 31, 2010.

- 6 -

Group 1 Automotive, Inc.

Additional Information - Consolidated

(Unaudited)


			Three Months Ended December 31,				Twelve Months Ended December 31,
			2011 (%)		2010 (%)		2011 (%)		2010 (%)
NEW VEHICLE UNIT SALES GEOGRAPHIC MIX:
	Region	Geographic Market
	East	Massachusetts		10.0		12.2		11.3		14.3
		New Jersey		5.3		5.9		5.5		6.3
		New York		4.2		3.9		3.8		3.8
		Georgia		3.3		3.8		3.4		3.9
		New Hampshire		2.8		3.7		3.0		4.0
		Louisiana		2.5		3.6		2.8		3.2
		Mississippi		2.0		1.7		2.0		1.7
		South Carolina		1.7		1.9		1.5		1.3
		Alabama		1.3		1.1		1.2		1.2
		Maryland		0.8		0.8		0.8		0.8
		Florida		0.8		0.7		0.7		1.2

				34.7		39.3		36.0		41.7

	West	Texas		38.6		32.6		36.0		31.2
		California		13.7		14.5		13.9		13.7
		Oklahoma		8.0		7.4		8.2		7.8
		Kansas		0.9		0.9		0.9		0.9

				61.2		55.4		59.0		53.6

	International	United Kingdom		4.1		5.3		5.0		4.7

				100.0		100.0		100.0		100.0

NEW VEHICLE UNIT SALES BRAND MIX:
	Toyota/Scion/Lexus			29.8		35.5		30.4		35.5
	Nissan/Infiniti			12.7		12.6		13.7		14.1
	BMW/MINI			12.7		13.3		13.1		11.9
	Ford			9.9		7.4		8.9		7.8
	Honda/Acura			9.4		11.6		10.7		12.0
	Daimler			6.8		6.3		5.9		5.8
	GM			6.4		4.3		5.6		4.0
	Chrysler			4.8		3.3		4.5		3.0
	Other			7.5		5.7		7.2		5.9

				100.0		100.0		100.0		100.0

NEW VEHICLE UNIT SALES OTHER MIX:
	Import			50.4		55.1		53.2		57.5
	Luxury			29.4		30.1		28.1		27.8
	Domestic			20.2		14.8		18.7		14.7

				100.0		100.0		100.0		100.0

	Car			51.4		56.4		54.1		58.2
	Truck			48.6		43.6		45.9		41.8

				100.0		100.0		100.0		100.0

- 7 -

Group 1 Automotive, Inc.

Additional Information - Consolidated

(Unaudited)

(Dollars in thousands, except per unit amounts)


	Three Months Ended December 31,									Twelve Months Ended December 31,
	2011			2010			% Change			2011			2010			% Change
REVENUES:
New vehicle retail sales	$	945,392		$	832,714			13.5		$	3,402,647		$	3,086,807			10.2

Used vehicle retail sales		362,911			310,663			16.8			1,416,520			1,271,039			11.4
Used vehicle wholesale sales		59,434			58,877			0.9			251,043			215,530			16.5

Total used		422,345			369,540			14.3			1,667,563			1,486,569			12.2
Parts and service		204,711			191,242			7.0			813,819			767,004			6.1
Finance and insurance		53,481			44,256			20.8			195,736			168,789			16.0

Total	$	1,625,929		$	1,437,752			13.1		$	6,079,765		$	5,509,169			10.4

GROSS MARGIN %:
New vehicle retail sales		6.0			5.6						6.2			5.8
Used vehicle retail sales		8.0			8.2						8.8			9.0
Used vehicle wholesale sales		0.2			(0.7	)					1.6			1.3
Total used		6.9			6.8						7.7			7.9
Parts and service		51.8			53.1						52.3			53.8
Finance and insurance		100.0			100.0						100.0			100.0
Total		15.1			15.1						15.8			15.9

GROSS PROFIT:
New vehicle retail sales	$	57,140		$	46,235			23.6		$	210,338		$	177,795			18.3

Used vehicle retail sales		29,009			25,451			14.0			124,524			115,004			8.3
Used vehicle wholesale sales		122			(391	)		131.2			4,080			2,697			51.3

Total used		29,131			25,060			16.2			128,604			117,701			9.3
Parts and service		106,109			101,470			4.6			425,922			412,748			3.2
Finance and insurance		53,481			44,256			20.8			195,736			168,789			16.0

Total	$	245,861		$	217,021			13.3		$	960,600		$	877,033			9.5

UNITS SOLD:
Retail new vehicles sold		27,444			25,383			8.1			102,022			97,511			4.6

Retail used vehicles sold		17,775			15,771			12.7			70,475			66,001			6.8
Wholesale used vehicles sold		8,751			8,808			(0.6	)		35,997			33,524			7.4

Total used		26,526			24,579			7.9			106,472			99,525			7.0

AVERAGE RETAIL SALES PRICE:
New vehicle retail	$	34,448		$	32,806			5.0		$	33,352		$	31,656			5.4
Used vehicle retail	$	20,417		$	19,698			3.7		$	20,100		$	19,258			4.4

GROSS PROFIT PER UNIT SOLD:
New vehicle retail sales	$	2,082		$	1,821			14.3		$	2,062		$	1,823			13.1
Used vehicle retail sales		1,632			1,614			1.1			1,767			1,742			1.4
Used vehicle wholesale sales		14			(44	)		131.8			113			80			41.3
Total used		1,098			1,020			7.6			1,208			1,183			2.1
Finance and insurance (per retail unit)	$	1,183		$	1,075			10.0		$	1,135		$	1,032			10.0

OTHER⁽¹⁾:
SG&A expenses	$	187,109		$	170,839			9.5		$	734,229		$	689,320			6.5
SG&A as % revenues		11.5			11.9						12.1			12.5
SG&A as % gross profit		76.1			78.7						76.4			78.6
Operating margin %		3.2			2.8						3.3			2.9
Pretax margin %		2.2			1.7						2.3			1.8

FLOORPLAN EXPENSE:
Floorplan interest	$	(7,442	)	$	(8,890	)		(16.3	)	$	(27,687	)	$	(34,110	)		(18.8	)
Floorplan assistance		7,308			6,162			18.6			26,144			23,998			8.9

Net floorplan expense	$	(134	)	$	(2,728	)		(95.1	)	$	(1,543	)	$	(10,112	)		(84.7	)

⁽¹⁾

These amounts have been adjusted to exclude the impact of certain items to provide additional information regarding the performance of our operations and improve period-to-period comparability. Refer to our Reconciliation of Certain Non-GAAP Financial Measures for a description of the aforementioned adjustments.

- 8 -

Group 1 Automotive, Inc.

Additional Information - Same Store⁽¹⁾

(Unaudited)

(Dollars in thousands, except per unit amounts)


	Three Months Ended December 31,									Twelve Months Ended December 31,
	2011			2010			% Change			2011			2010			% Change
REVENUES:
New vehicle retail sales	$	883,288		$	830,877			6.3		$	3,252,960		$	3,056,307			6.4

Used vehicle retail sales		344,775			309,732			11.3			1,361,006			1,261,856			7.9
Used vehicle wholesale sales		55,837			58,443			(4.5	)		240,467			212,631			13.1

Total used		400,612			368,175			8.8			1,601,473			1,474,487			8.6
Parts and service		191,754			190,839			0.5			776,005			757,132			2.5
Finance and insurance		50,346			44,145			14.0			188,105			167,339			12.4

Total	$	1,526,000		$	1,434,036			6.4		$	5,818,543		$	5,455,265			6.7

GROSS MARGIN %:
New vehicle retail sales		6.1			5.6						6.2			5.8
Used vehicle retail sales		7.9			8.2						8.8			9.1
Used vehicle wholesale sales		0.4			(0.4	)					1.8			1.4
Total used		6.9			6.8						7.7			8.0
Parts and service		52.6			53.0						53.0			53.9
Finance and insurance		100.0			100.0						100.0			100.0
Total		15.2			15.1						15.9			15.9

GROSS PROFIT:
New vehicle retail sales	$	53,923		$	46,226			16.7		$	202,615		$	176,202			15.0

Used vehicle retail sales		27,313			25,390			7.6			119,568			114,305			4.6
Used vehicle wholesale sales		205			(229	)		189.5			4,301			2,982			44.2

Total used		27,518			25,161			9.4			123,869			117,287			5.6
Parts and service		100,850			101,237			(0.4	)		411,281			407,993			0.8
Finance and insurance		50,346			44,145			14.0			188,105			167,339			12.4

Total	$	232,637		$	216,769			7.3		$	925,870		$	868,821			6.6

UNITS SOLD:
Retail new vehicles sold		25,688			25,329			1.4			97,495			96,629			0.9

Retail used vehicles sold		16,838			15,718			7.1			67,647			65,417			3.4
Wholesale used vehicles sold		8,185			8,761			(6.6	)		34,395			33,176			3.7

Total used		25,023			24,479			2.2			102,042			98,593			3.5

AVERAGE RETAIL SALES PRICE:
New vehicle retail	$	34,385		$	32,803			4.8		$	33,365		$	31,629			5.5
Used vehicle retail	$	20,476		$	19,706			3.9		$	20,119		$	19,289			4.3

GROSS PROFIT PER UNIT SOLD:
New vehicle retail sales	$	2,099		$	1,825			15.0		$	2,078		$	1,823			14.0
Used vehicle retail sales		1,622			1,615			0.4			1,768			1,747			1.2
Used vehicle wholesale sales		25			(26	)		196.2			125			90			38.9
Total used		1,100			1,028			7.0			1,214			1,190			2.0
Finance and insurance (per retail unit)	$	1,184		$	1,075			10.1		$	1,139		$	1,033			10.3

OTHER ⁽²⁾:
SG&A expenses	$	176,588		$	169,978			3.9		$	705,558		$	677,843			4.1
SG&A as % revenues		11.6			11.9						12.1			12.4
SG&A as % gross profit		75.9			78.4						76.2			78.0
Operating margin %		3.2			2.8						3.3			3.0

FLOORPLAN EXPENSE:
Floorplan interest	$	(6,917	)	$	(8,873	)		(22.0	)	$	(26,493	)	$	(33,756	)		(21.5	)
Floorplan assistance		6,676			6,129			8.9			24,968			23,663			5.5

Net floorplan expense	$	(241	)	$	(2,744	)		(91.2	)	$	(1,525	)	$	(10,093	)		(84.9	)

⁽¹⁾

Same Store amounts include the results for the identical months in each period presented in the comparison, commencing with the first full month we owned the dealership and, in the case of dispositions, ending with the last full month we owned it. Same Store results also include the activities of our corporate office.

⁽²⁾

- 9 -

Group 1 Automotive, Inc.

Reconciliation of Certain Non-GAAP Financial Measures

(Unaudited)

(Dollars in thousands, except per share amounts)


	Three Months Ended December 31,								Twelve Months Ended December 31,
	2011			2010			% Change		2011			2010			% Change
NET INCOME RECONCILIATION:

As reported	$	20,855		$	10,569			97.3	$	82,394		$	50,304			63.8
After-tax adjustments:
Non-cash asset impairment charges ⁽²⁾		461			4,947					2,994			6,930
Loss on dealership dispositions ⁽³⁾		—			—					—			3,698
Loss on debt redemption ⁽⁴⁾		—			—					—			2,458
Severance costs related to UK-dealership acquisitions ⁽⁵⁾		—			—					—			405
Income tax benefit related to discrete items ⁽⁶⁾		—			(810	)				—			(810	)
Gain on sale of real estate⁽⁷⁾		—			—					—			(761	)
Accrual for pending legal matter ⁽¹¹⁾		641			—					641			—

Adjusted net income ⁽¹⁾	$	21,957		$	14,706			49.3	$	86,029		$	62,224			38.3

ADJUSTED NET INCOME ATTRIBUTABLE TO DILUTED COMMON SHARES RECONCILIATION:

Adjusted net income	$	21,957		$	14,706			49.3	$	86,029		$	62,224			38.3
Less: Adjusted earnings allocated to participating securities		1,182			785					4,931			3,309

Adjusted net income available to diluted common shares	$	20,775		$	13,921			49.2	$	81,098		$	58,915			37.7

DILUTED INCOME PER COMMON SHARE RECONCILIATION:

As reported	$	0.90		$	0.45			100.0	$	3.47		$	2.09			66.0
After-tax adjustments:
Non-cash asset impairment charges		0.02			0.21					0.13			0.29
Loss on dealership dispositions		—			—					—			0.15
Loss on debt redemption		—			—					—			0.10
Severance costs related to UK-dealership acquisitions		—			—					—			0.02
Income tax benefit related to discrete items		—			(0.04	)				—			(0.03	)
Gain on sale of real estate		—			—					—			(0.03	)
Accrual for pending legal matter		0.02			—					0.02			—

Adjusted diluted income per share ⁽¹⁾	$	0.94		$	0.62			51.6	$	3.62		$	2.59			39.8

SG&A RECONCILIATION:

As reported	$	188,109		$	170,839			10.1	$	735,229		$	693,635			6.0
Pre-tax adjustments:
Loss on dealership dispositions		—			—					—			(5,053	)
Severance costs related to UK-dealership acquisitions		—			—					—			(562	)
Gain on sale of real estate		—			—					—			1,300
Accrual for pending legal matter		(1,000	)		—					(1,000	)		—

Adjusted SG&A ⁽¹⁾	$	187,109		$	170,839			9.5	$	734,229		$	689,320			6.5

SG&A AS % REVENUES:

Unadjusted		11.6			11.9					12.1			12.6
Adjusted ⁽¹⁾		11.5			11.9					12.1			12.5

SG&A AS % GROSS PROFIT:

Unadjusted		76.5			78.7					76.5			79.1
Adjusted ⁽¹⁾		76.1			78.7					76.4			78.6

OPERATING MARGIN %:

Unadjusted		3.1			2.2					3.2			2.7
Adjusted ^{(1), (8)}		3.2			2.8					3.3			2.9

PRETAX MARGIN %:

Unadjusted		2.1			1.1					2.2			1.5
Adjusted ^{(1), (9)}		2.2			1.7					2.3			1.8

SAME STORE SG&A RECONCILIATION:

As reported	$	177,588		$	169,978			4.5	$	706,558		$	678,405			4.1
Pre-tax adjustments:
Severance costs related to UK-dealership acquisitions		—			—					—			(562	)
Accrual for pending legal matter		(1,000	)		—					(1,000	)		—

Adjusted Same Store SG&A ⁽¹⁾	$	176,588		$	169,978			3.9	$	705,558		$	677,843			4.1

SAME STORE SG&A AS % REVENUES:

Unadjusted		11.6			11.9					12.1			12.4
Adjusted ⁽¹⁾		11.6			11.9					12.1			12.4

SAME STORE SG&A AS % GROSS PROFIT:

Unadjusted		76.3			78.4					76.3			78.1
Adjusted ⁽¹⁾		75.9			78.4					76.2			78.0

SAME STORE OPERATING MARGIN %:

Unadjusted		3.1			2.5					3.2			2.9
Adjusted ^{(1), (10)}		3.2			2.8					3.3			3.0


	Three Months Ended December 31,								Twelve Months Ended December 31,
	2011			2010			% Change		2011			2010			% Change
CASH FLOWS FROM OPERATING ACTIVITIES RECONCILIATION:
Net cash provided by (used in) operating activities	$	(101,802	)	$	(16,281	)		525.3	$	199,316		$	(68,466	)		391.1
Change in floorplan notes payable-credit facility, excluding floorplan offset account and net acquisition and disposition related activity		143,307			33,350					(13,350	)		193,430
Change in floorplan notes payable-manufacturer affiliates associated with net acquisition and disposition related activity		(7,134	)		—					(33,712	)		(2,210	)

Adjusted net cash provided by operating activities⁽¹⁾	$	34,371		$	17,069			101.4	$	152,254		$	122,754			24.0

⁽¹⁾

We believe that these adjusted financial measures are relevant and useful to investors because they provide additional information regarding the performance of our operations and improve period-to-period comparability. These measures are not measures of financial performance under GAAP. Accordingly, they should not be considered as substitutes for their unadjusted counterparts, which are prepared in accordance with GAAP. Although we find these non-GAAP results useful in evaluating the performance of our business, our reliance on these measures is limited because the adjustments often have a material impact on our financial statements calculated in accordance with GAAP. Therefore, we typically use these adjusted numbers in conjunction with our GAAP results to address these limitations.

⁽²⁾	Adjustments are net of tax benefit of $336 and $1,811 for the three and twelve months ended December 31, 2011, respectively, and $2,772 and $3,910 for the three and twelve months ended December 31, 2010 and are calculated utilizing the applicable federal and state tax rates for the adjustment.

⁽³⁾	Adjustment is net of tax benefit of $1,355 for the twelve months ended December 31, 2010, and is calculated utilizing the applicable federal and state tax rates for the adjustment.

⁽⁴⁾	Adjustment is net of tax benefit of $1,414 for the twelve months ended December 31, 2010, and is calculated utilizing the applicable federal and state tax rates for the adjustment.

⁽⁵⁾	Adjustment is net of a tax benefit of $157 for the twelve months ended December 31, 2010, and is calculated utilizing the applicable UK corporate tax rate for the adjustment.

⁽⁶⁾	The $0.8 million income tax benefit for the three and twelve months ended December 31, 2010 relates to the tax deductibility of goodwill written off in conjunction with the termination of a franchise.

⁽⁷⁾	Adjustment is net of a tax provision of $539 for the twelve months ended December 31, 2010, and is calculated utilizing the applicable federal and state tax rates for the adjustment.

⁽⁸⁾	Excludes the impact of non-cash asset impairment charges.

⁽⁹⁾	Excludes the impact of non-cash asset impairment charges, loss on dealership dispositions, loss on debt redemption, severance costs related to UK-dealership acquisitions, gain on sale of real estate and accrual for pending legal matter.

⁽¹⁰⁾

Excludes the impact of Same Store non-cash asset impairment charges of $341 and $4,038 and accrual for pending legal matter of $1,000 for the three and twelve months ended December 31, 2011, respectively, and $4,823 and $6,725 for the three and twelve months ended December 31, 2010. Adjusted Same Store operating income was $49,126 and $194,124 for the three and twelve months ended December 31, 2011, respectively, and $40,331 and $164,744 for the three and twelve months ended December 31, 2010.

⁽¹¹⁾	Adjustment is net of tax benefit of $359 for the three and twelve months ended December 31, 2011, and is calculated utilizing the applicable federal and state tax rates for the adjustment.

- 10 -

Attached files

Stock widget

Investing forum

GROUP 1 AUTOMOTIVE INC Reports