HOUSTON — Group 1 Automotive, Inc. a Fortune 500 automotive retailer, reported a third-quarter adjusted net income increase of 23.6 percent to $23.8 million, or $1.04 per diluted share, for the period ended Sept. 30, 2011. This compares to adjusted net income of $19.3 million, or $0.84 per diluted share, for the third quarter of 2010. Including the $2.3 million net after-tax adjustments for non-cash asset impairment charges shown in the attached reconciliation table, net income for the third quarter of 2011 was $21.5 million, or $0.94 per diluted share.
- Total revenues increased 7.4 percent, to $1.6 billion, from the prior-year period.
- Total gross profit grew 8.7 percent to $248.8 million.
- New vehicle gross profit grew 19.3 percent on 4.9 percent higher revenues, as unit sales fell 2.3 percent.
- Retail used vehicle gross profit increased 4.9 percent on 10.7 percent higher revenues, as gross profit per retail unit remained relatively flat.
- Parts and service revenues increased 7.0 percent, reflecting increases in wholesale, customer-pay and collision segments of the business.
- Record-setting finance and insurance gross profit of $1,156 per retail unit.
- Selling, general and administrative expense as a percent of gross profit was 75.7 percent, reflecting continued leverage from cost reduction actions.
- Same-store operating margin (adjusted) improved to 3.5 percent on higher gross profit.
- Earnings per diluted share (adjusted) of $1.04.
“We are pleased to deliver another record-setting quarter, with growth in every segment of the business,” said Earl J. Hesterberg, Group 1’s president and chief executive officer. “Despite the challenges of the overall economy and continuing inventory shortages in key brands, such as Toyota and Honda, we generated excellent profit growth. This was possible due to a well-balanced performance in all of our businesses with a note-worthy all-time record in our finance and insurance business.”
On a same-store basis, Group 1 reported 6.3 percent growth in gross profit on 6.7 percent higher revenues, reflecting increases in all operating segments from the prior year. Same-store new vehicle gross profit grew 14.4 percent on 6.5 percent higher revenues; used vehicle gross profit was 4.6 percent higher on an 8.5 percent revenue increase; finance and insurance revenues increased 11.8 percent on 1.3 percent more retail unit sales; and, parts and service revenues were 3.2 percent higher. Selling, general and administrative expenses as a percent of revenues improved 30 basis points to 12.3 percent, as expenses grew at a slower pace than revenues.
During the third quarter, Group 1 repurchased 976,701 shares of its common stock at an average price of $37.63. As of Sept. 30, $16.7 million remained under a board authorized$50.0 million share repurchase program.
Corporate Development Update
As previously announced on Oct. 11, Group 1 acquired Buick, Cadillac, Fiat, GMC and Volkswagen franchises that are expected to generate $188.0 million in total estimated annualized revenues. Year to date, the company has acquired 13 franchises estimated to generate $528.0 million in annualized revenues including the third-quarter acquisitions.
About Group 1 Automotive, Inc.
Group 1 owns and operates 108 automotive dealerships, 140 franchises, and 27 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,” 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,” “may” or “will” and similar expressions. 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. These factors, as well as additional factors that could affect our forward-looking statements, 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. We undertake no duty to update our forward-looking statements, including our earnings outlook, whether as a result of new information, future developments or otherwise, except as may be required by law.