Group 1 Automotive Reports All-Time Record Quarterly Profits Revenues Increase 29 Percent

HOUSTON, July 26, 2012 /PRNewswire/ -- Group 1 Automotive, Inc. (NYSE: GPI), a Fortune 500 automotive retailer, today reported record 2012 second-quarter adjusted net income of $29.7 million, a 20.1 percent increase from the prior-year period, and record adjusted diluted earnings per common share of $1.25 for the period ended June 30, 2012. As shown in the attached reconciliation table, the company recognized a $1.1 million net after-tax adjustment for insurance deductibles associated with property damage from a major hailstorm, and a non-cash asset impairment charge, partially offset by a net gain on real estate transactions in the quarter ended June 30, 2012. Before adjusting for these items, reported net income was $28.6 million and diluted earnings per common share were $1.20.

Year-to-date 2012 adjusted net income increased 31.3 percent, to a record $52.9 million. Adjusted diluted earnings per common share were $2.23, making this the best first six-month results in the company's history.

"Group 1's record-setting second-quarter performance was driven by strong same-store revenue growth in our new and used retail segments and another record-setting quarter in finance and insurance," said Earl J. Hesterberg, Group 1's president and chief executive officer. "Even with the impact of a major hailstorm that severely damaged about 2,200 units at seven of Group 1's Oklahoma dealerships during the quarter, we outpaced the industry unit sales rate and further improved our expense leverage."

Record-Setting Second-Quarter 2012 Highlights

  • Total revenues of $1.9 billion were a new any-quarter record high for the company – up 28.6 percent over prior year.
  • Total gross margin was 15.1 percent, as gross profit grew 16.8 percent from the prior year to an all-time record of $285.3 million.
  • New vehicle gross profit increased 17.7 percent on 33.4 percent higher revenues, as the company retailed 36.6 percent more units than in the prior-year period. Average vehicle selling price declined 2.3 percent, to $32,824.
  • Retail used vehicle unit sales surged 27.9 percent over the prior year, with the average selling price increasing 1.0 percent, to $20,734. Gross profit grew 12.4 percent on 29.2 percent higher revenues.
  • Parts and service revenues increased 7.9 percent from the prior year, reflecting continued growth in customer-pay, wholesale parts and collision sales.
  • Finance and insurance gross profit per retail unit increased $65 from the prior year, to a record $1,191.
  • Adjusted selling, general and administrative expenses as a percent of gross profit improved to 74.6 percent, compared with the prior-year period, and improved 190 basis points from the first quarter.
  • Adjusted operating margin was 3.4 percent, a 20 basis-point improvement from the first-quarter period.

Share Repurchases

As announced on July 11, Group 1 repurchased 241,991 shares of its common stock at an average price of $46.75 during the second quarter. Additionally, it was announced that the board authorized a new $50 million common share repurchase program that replaced the $5.4 million remaining at June 30 under the prior authorization.

Corporate Development Recap

During the second quarter, Group 1 acquired six Audi franchises in the United Kingdom and two Volkswagen and one Honda franchise in Florida. In total, these nine franchises are estimated to generate $361.0 million in annual revenues.

Year to date, Group 1 has acquired 12 franchises that are expected to generate $504.5 million in annual revenues.

Second-Quarter Earnings Conference Call

Group 1's senior management will host a conference call today at 10 a.m. ET to discuss the second-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: 10015858

A telephonic replay will be available following the call through Aug. 2 at 9 a.m. ET by dialing:

Domestic: 1.877.344.7529
International: 1.412.317.0088
Conference ID: 10015858

About Group 1 Automotive, Inc.

Group 1 owns and operates 122 automotive dealerships, 159 franchises, and 28 collision centers in the United States and the United Kingdom that offer 32 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 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 the 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.

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
or
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 June 30,


Six Months Ended June 30,



2012



2011



% Change


2012



2011



% Change

REVENUES:
















New vehicle retail sales

$    1,080,710



$     809,881



33.4


$     1,993,305



$     1,594,595



25.0

Used vehicle retail sales

456,234



353,047



29.2


871,208



676,494



28.8

Used vehicle wholesale sales

73,134



60,607



20.7


139,991



122,558



14.2

Parts and service

220,313



204,091



7.9


433,414



399,041



8.6

Finance and insurance

65,435



46,519



40.7


122,653



90,759



35.1


Total revenues

1,895,826



1,474,145



28.6


3,560,571



2,883,447



23.5


















COST OF SALES:
















New vehicle retail sales

1,016,868



755,617



34.6


1,876,643



1,497,559



25.3

Used vehicle retail sales

417,388



318,499



31.0


795,965



613,046



29.8

Used vehicle wholesale sales

72,811



58,940



23.5


136,964



118,397



15.7

Parts and service

103,415



96,878



6.7


205,231



188,459



8.9


Total cost of sales

1,610,482



1,229,934



30.9


3,014,803



2,417,461



24.7


















GROSS PROFIT

285,344



244,211



16.8


545,768



465,986



17.1


















SELLING, GENERAL AND
















ADMINISTRATIVE EXPENSES

214,327



183,051



17.1


413,439



358,935



15.2


















DEPRECIATION AND
















AMORTIZATION EXPENSE

7,742



6,581



17.6


14,978



13,036



14.9


















ASSET IMPAIRMENTS

187



142



31.7


288



364



(20.9)


















OPERATING INCOME

63,088



54,437



15.9


117,063



93,651



25.0


















OTHER EXPENSE:
















Floorplan interest expense

(7,863)



(6,521)



20.6


(15,482)



(13,281)



16.6


















Other interest expense, net

(9,190)



(8,225)



11.7


(18,230)



(16,167)



12.8


















INCOME BEFORE INCOME TAXES

46,035



39,691



16.0


83,351



64,203



29.8


















PROVISION FOR INCOME TAXES

(17,410)



(15,008)



16.0


(31,609)



(24,158)



30.8


















NET INCOME

$         28,625



$       24,683



16.0


$          51,742



$          40,045



29.2



































DILUTED INCOME PER SHARE

$             1.20



$           1.03



16.5


$              2.18



$              1.66



31.3


















Weighted average dilutive common shares outstanding

22,513



22,651



(0.6)


22,522



22,693



(0.8)

Weighted average participating securities

1,317



1,393



(5.5)


1,263



1,393



(9.3)

Total weighted average shares outstanding

23,830



24,044



(0.9)


23,785



24,086



(1.2)

 

Group 1 Automotive, Inc.

Consolidated Balance Sheets

(Dollars in thousands)












June 30,


December 31,






2012


2011


% Change

ASSETS:

(Unaudited)













CURRENT ASSETS:







Cash and cash equivalents

$            9,544


$            14,895


(35.9)


Contracts in transit and vehicle receivables, net

150,978


167,507


(9.9)


Accounts and notes receivable, net

114,361


92,775


23.3


Inventories, net

1,071,927


867,470


23.6


Deferred income taxes

18,147


16,012


13.3


Prepaid expenses and other current assets

20,154


16,925


19.1



Total current assets

1,385,111


1,175,584


17.8

PROPERTY AND EQUIPMENT, net

638,971


585,633


9.1

GOODWILL AND INTANGIBLE FRANCHISE RIGHTS

758,716


702,145


8.1

OTHER ASSETS

12,459


12,981


(4.0)



Total assets

$     2,795,257


$       2,476,343


12.9









LIABILITIES AND STOCKHOLDERS' EQUITY:














CURRENT LIABILITIES:







Floorplan notes payable - credit facility

$        886,237


$          718,945


23.3



Offset account related to floorplan notes payable - credit facility

(101,760)


(109,207)


(6.8)


Floorplan notes payable - manufacturer affiliates

174,783


155,980


12.1


Current maturities of long-term debt and short-term financing

25,184


14,663


71.8


Current liabilities from interest rate risk management activities

2,119


7,273


(70.9)


Accounts payable

166,127


148,048


12.2


Accrued expenses

117,625


109,245


7.7



Total current liabilities

1,270,315


1,044,947


21.6

2.25% CONVERTIBLE SENIOR NOTES (aggregate principal of 







$182,753 at June 30, 2012 and December 31, 2011)

148,603


144,985


2.5

3.00% CONVERTIBLE SENIOR NOTES (aggregate principal of 







$115,000 at June 30, 2012 and December 31, 2011)

79,018


77,401


2.1

MORTGAGE FACILITY, net of current maturities

54,984


38,873


41.4

OTHER REAL ESTATE RELATED AND LONG-TERM DEBT,







net of current maturities

199,387


184,237


8.2

CAPITAL LEASE OBLIGATIONS RELATED TO REAL ESTATE,







net of current maturities

34,978


37,105


(5.7)

DEFERRED INCOME TAXES

83,295


78,459


6.2

LIABILITIES FROM INTEREST RATE RISK MANAGEMENT ACTIVITIES

38,201


26,766


42.7

OTHER LIABILITIES

40,702


36,470


11.6

COMMITMENTS AND CONTINGENCIES














STOCKHOLDERS' EQUITY:







Common stock

261


260


0.4


Additional paid-in capital

368,069


363,375


1.3


Retained earnings

636,182


591,037


7.6


Accumulated other comprehensive loss

(33,160)


(29,236)


13.4


Treasury stock

(125,578)


(118,336)


6.1



Total stockholders' equity

845,774


807,100


4.8



Total liabilities and stockholders' equity

$     2,795,257


$       2,476,343


12.9









KEY DEBT COVENANT METRICS:







Senior secured adjusted ratio (must be less than 3.75)

2.36


2.46




Total leverage ratio (must be less than 5.50)

3.44


3.65




Fixed charge coverage ratio (must be greater than 1.35)

1.97


1.94



 

Group 1 Automotive, Inc.

Consolidated Statements of Adjusted Cash Flows from Operating Activities

(Unaudited)

(In thousands)
















Three Months Ended June 30,


Six Months Ended June 30,



2012


2011


% Change


2012


2011


% Change














Net income

$     28,625


$     24,683


16.0


$      51,742


$     40,045


29.2

Adjustments to reconcile net income to net cash provided by












 operating activities:












Asset impairments

187


142


31.7


288


364


(20.9)


Depreciation and amortization

7,742


6,581


17.6


14,978


13,036


14.9


Deferred income taxes

3,012


7,062


(57.3)


6,075


14,110


(56.9)


Gain on disposition of assets and franchise

(1,580)


(786)


101.0


(1,588)


(786)


102.0


Stock-based compensation

3,021


2,814


7.4


5,915


5,558


6.4


Amortization of debt discount and issue costs

3,218


2,970


8.4


6,388


5,848


9.2


Other

128


71


80.3


57


(102)


155.9

Changes in operating assets and liabilities, net of effects of












  acquisitions and dispositions:













Accounts payable and accrued expenses

9,785


14,453


(32.3)


17,623


24,890


(29.2)


Accounts and notes receivable

(21,859)


(3,315)


559.4


(14,720)


3,963


(471.4)


Inventories

(75,482)


47,067


(260.4)


(160,082)


52,803


(403.2)


Contracts-in-transit and vehicle receivables

5,825


11,750


(50.4)


23,871


8,127


193.7


Prepaid expenses and other assets

1,763


(374)


571.4


6,215


1,022


508.1


Floorplan notes payable - credit facility (1)

79,218


(69,722)


213.6


151,581


(73,286)


306.8


Floorplan notes payable - manufacturer affiliates (2)

(1,423)


10,829


(113.1)


(3,077)


5,866


(152.5)


Deferred revenues

767


(447)


271.6


594


(948)


162.7

Adjusted net cash provided by operating activities

$     42,947


$     53,778


(20.1)


$    105,860


$   100,510


5.3



























 (1)

Excludes net acquisition/(disposition) related activity of $6,043 and $17,926 for the three months ended June 30, 2012 and 2011, respectively. Excludes net acquisition/(disposition) related activity of $15,712 and $20,476 for the six months ended June 30, 2012, and 2011, respectively.

 (2)

Excludes net acquisition/(disposition) related activity of $22,419 for the three months ended June 31, 2011 and $26,578 for the six months ended June 30, 2011.

 

Group 1 Automotive, Inc.

Additional Information - Consolidated

(Unaudited)














Three Months Ended


Six Months Ended




June 30,


June 30,




2012 (%)


2011 (%)


2012 (%)


2011 (%)

NEW VEHICLE UNIT SALES GEOGRAPHIC MIX: 









Region

Geographic Market









East

Massachusetts

9.7


11.2


10.2


12.0



New Jersey

5.1


5.9


5.1


5.9



Georgia

3.4


3.2


3.4


3.6



New York

3.2


4.3


3.3


3.8



New Hampshire

3.0


3.0


2.9


3.2



Louisiana

2.5


3.0


2.6


3.1



Mississippi

2.1


1.9


2.1


2.0



South Carolina

1.9


1.2


1.8


1.4



Florida

1.2


0.8


1.0


0.7



Alabama

1.0


1.1


1.0


1.2



Maryland

0.6


1.0


0.7


0.8




33.7


36.6


34.1


37.7












West

Texas

36.0


34.6


36.8


33.3



California

14.4


13.9


14.5


14.6



Oklahoma

7.8


8.2


7.8


8.1



Kansas

1.6


1.1


1.4


1.0




59.8


57.8


60.5


57.0












International

United Kingdom

6.5


5.6


5.4


5.3




100.0


100.0


100.0


100.0











NEW VEHICLE UNIT SALES BRAND MIX:









Toyota/Scion/Lexus


31.2


28.5


30.9


31.5


Honda/Acura


11.4


11.3


11.2


12.1


BMW/MINI


11.3


14.9


11.0


13.3


Nissan/Infiniti


10.8


12.7


11.8


13.4


Ford


8.8


8.3


9.5


7.7


Volkswagen/Audi/Porsche


6.6


3.1


5.4


2.4


GM


5.8


5.0


6.0


4.8


Daimler


4.8


6.4


4.7


5.8


Chrysler


4.4


4.7


4.4


4.1


Other


4.9


5.1


5.1


4.9




100.0


100.0


100.0


100.0











NEW VEHICLE UNIT SALES OTHER MIX:









Import


54.7


52.2


55.2


55.5


Luxury


27.1


30.0


25.7


28.0


Domestic


18.2


17.8


19.1


16.5




100.0


100.0


100.0


100.0












Car


57.4


55.9


56.7


56.0


Truck


42.6


44.1


43.3


44.0




100.0


100.0


100.0


100.0

 

Group 1 Automotive, Inc.

Additional Information - Consolidated

(Unaudited)

(Dollars in thousands, except per unit amounts)


















Three Months Ended June 30,


Six Months Ended June 30,




2012


2011


% Change


2012


2011


% Change

REVENUES:













New vehicle retail sales

$     1,080,710


$       809,881


33.4


$     1,993,305


$     1,594,595


25.0


Used vehicle retail sales

456,234


353,047


29.2


871,208


676,494


28.8


Used vehicle wholesale sales

73,134


60,607


20.7


139,991


122,558


14.2



Total used

529,368


413,654


28.0


1,011,199


799,052


26.5


Parts and service

220,313


204,091


7.9


433,414


399,041


8.6


Finance and insurance

65,435


46,519


40.7


122,653


90,759


35.1



Total 

$     1,895,826


$    1,474,145


28.6


$     3,560,571


$     2,883,447


23.5















GROSS MARGIN %:













New vehicle retail sales

5.9


6.7




5.9


6.1




Used vehicle retail sales

8.5


9.8




8.6


9.4




Used vehicle wholesale sales

0.4


2.8




2.2


3.4





Total used

7.4


8.8




7.7


8.5




Parts and service

53.1


52.5




52.6


52.8




Finance and insurance

100.0


100.0




100.0


100.0





Total

15.1


16.6




15.3


16.2

















GROSS PROFIT:













New vehicle retail sales

$          63,842


$         54,264


17.7


$        116,662


$          97,036


20.2


Used vehicle retail sales

38,846


34,548


12.4


75,243


63,448


18.6


Used vehicle wholesale sales

323


1,667


(80.6)


3,027


4,161


(27.3)



Total used

39,169


36,215


8.2


78,270


67,609


15.8


Parts and service

116,898


107,213


9.0


228,183


210,582


8.4


Finance and insurance

65,435


46,519


40.7


122,653


90,759


35.1



Total 

$        285,344


$       244,211


16.8


$        545,768


$        465,986


17.1















UNITS SOLD:













Retail new vehicles sold

32,924


24,097


36.6


60,854


48,801


24.7


Retail used vehicles sold

22,004


17,200


27.9


42,753


33,930


26.0


Wholesale used vehicles sold

11,244


8,494


32.4


21,238


17,549


21.0



Total used

33,248


25,694


29.4


63,991


51,479


24.3















AVERAGE RETAIL SALES PRICE:













New vehicle retail

$          32,824


$         33,609


(2.3)


$          32,756


$          32,676


0.2


Used vehicle retail

$          20,734


$         20,526


1.0


$          20,378


$          19,938


2.2















GROSS PROFIT PER UNIT SOLD:













New vehicle retail sales

$            1,939


$           2,252


(13.9)


$            1,917


$            1,988


(3.6)


Used vehicle retail sales

1,765


2,009


(12.1)


1,760


1,870


(5.9)


Used vehicle wholesale sales

29


196


(85.2)


143


237


(39.7)



Total used

1,178


1,409


(16.4)


1,223


1,313


(6.9)


Finance and insurance (per retail unit)

$            1,191


$           1,126


5.8


$            1,184


$            1,097


7.9















OTHER: (1)













SG&A expenses

$        212,748


$       183,051


16.2


$        411,860


$        358,935


14.7


SG&A as % revenues

11.2


12.4




11.6


12.4




SG&A as % gross profit

74.6


75.0




75.5


77.0




Operating margin %

3.4


3.7




3.3


3.3




Pretax margin %

2.5


2.7




2.4


2.2

















FLOORPLAN EXPENSE:













Floorplan interest

$          (7,863)


$         (6,521)


20.6


$        (15,482)


$         (13,281)


16.6


Floorplan assistance

8,658


5,886


47.1


16,072


12,096


32.9



Net floorplan income (expense)

$               795


$            (635)


225.2


$               590


$           (1,185)


149.8















(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.

 

Group 1 Automotive, Inc.

Additional Information - Same Store(1)

(Unaudited)

(Dollars in thousands, except per unit amounts)


















Three Months Ended June 30,


Six Months Ended June 30,




2012


2011


% Change


2012


2011


% Change

REVENUES:













New vehicle retail sales

$        979,317


$       806,141


21.5


$     1,820,048


$     1,589,794


14.5


Used vehicle retail sales

417,810


351,653


18.8


803,310


674,697


19.1


Used vehicle wholesale sales

63,212


60,542


4.4


124,427


122,478


1.6



Total used

481,022


412,195


16.7


927,737


797,175


16.4


Parts and service

206,171


203,592


1.3


404,708


397,666


1.8


Finance and insurance

60,563


46,293


30.8


113,775


90,486


25.7



Total 

$     1,727,073


$    1,468,221


17.6


$     3,266,268


$     2,875,121


13.6















GROSS MARGIN %:













New vehicle retail sales

5.8


6.7




5.8


6.1




Used vehicle retail sales

8.5


9.8




8.6


9.4




Used vehicle wholesale sales

0.7


2.7




2.3


3.4





Total used

7.5


8.7




7.7


8.4




Parts and service

52.8


52.6




52.7


52.8




Finance and insurance

100.0


100.0




100.0


100.0





Total

15.2


16.6




15.5


16.2

















GROSS PROFIT:













New vehicle retail sales

$          57,204


$         54,018


5.9


$        105,967


$          96,699


9.6


Used vehicle retail sales

35,545


34,327


3.5


68,949


63,179


9.1


Used vehicle wholesale sales

411


1,652


(75.1)


2,898


4,144


(30.1)



Total used

35,956


35,979


(0.1)


71,847


67,323


6.7


Parts and service

108,887


106,997


1.8


213,237


210,097


1.5


Finance and insurance

60,563


46,293


30.8


113,775


90,486


25.7



Total 

$        262,610


$       243,287


7.9


$        504,826


$        464,605


8.7















UNITS SOLD:













Retail new vehicles sold

29,899


23,977


24.7


55,691


48,637


14.5


Retail used vehicles sold

20,310


17,131


18.6


39,590


33,836


17.0


Wholesale used vehicles sold

9,949


8,484


17.3


19,162


17,535


9.3



Total used

30,259


25,615


18.1


58,752


51,371


14.4















AVERAGE RETAIL SALES PRICE:













New vehicle retail

$          32,754


$         33,621


(2.6)


$          32,681


$          32,687


(0.0)


Used vehicle retail

$          20,572


$         20,528


0.2


$          20,291


$          19,940


1.8















GROSS PROFIT PER UNIT SOLD:













New vehicle retail sales

$            1,913


$           2,253


(15.1)


$            1,903


$            1,988


(4.3)


Used vehicle retail sales

1,750


2,004


(12.7)


1,742


1,867


(6.7)


Used vehicle wholesale sales

41


195


(79.0)


151


236


(36.0)



Total used

1,188


1,405


(15.4)


1,223


1,311


(6.7)


Finance and insurance (per retail unit)

$            1,206


$           1,126


7.1


$            1,194


$            1,097


8.8















OTHER: (2)













SG&A expenses

$        194,490


$       182,674


8.2


$        379,767


$        358,185


6.9


SG&A as % revenues

11.3


12.4




11.6


12.5




SG&A as % gross profit

74.1


75.1




75.2


77.1




Operating margin % 

3.5


3.7




3.4


3.2

















FLOORPLAN EXPENSE:













Floorplan interest

$          (7,177)


$         (6,450)


11.3


$         (14,178)


$        (13,201)


7.4


Floorplan assistance

7,827


5,866


33.4


14,473


12,066


19.9



Net floorplan income (expense)

$               650


$            (584)


211.3


$               295


$          (1,135)


126.0















(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)

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.

 

Group 1 Automotive, Inc.

Reconciliation of Certain Non-GAAP Financial Measures

(Unaudited)

 (Dollars in thousands, except per share amounts)











































Three Months Ended June 30,


Six Months Ended June 30,

NET INCOME RECONCILIATION:

2012



2011



% Change


2012



2011



% Change





















As reported

$      28,625



$      24,683



16.0


$       51,742



$       40,045



29.2


  After-tax Adjustments:


















Non-cash asset impairment charges(2)

115



85





115



225






Net gain on real estate transactions(3)

(659)



-





(659)



-






Insurance deductibles for hail storm damage (4)

1,658



-





1,658



-







Adjusted net income (1)

$      29,739



$      24,768



20.1


$       52,856



$       40,270



31.3








ADJUSTED NET INCOME ATTRIBUTABLE TO DILUTED
















COMMON SHARES RECONCILIATION:




































Adjusted net income

$      29,739



$      24,768



20.1


$       52,856



$       40,270



31.3


Less: Adjusted earnings allocated to participating securities

1,637



1,424



15.0


2,789



2,310



20.7


Adjusted net income available to diluted common shares

$      28,102



$      23,344



20.4


$       50,067



$       37,960



31.9




















DILUTED INCOME PER COMMON SHARE RECONCILIATION:




































As reported

$          1.20



$          1.03



16.5


$           2.18



$           1.66



31.3


  After-tax Adjustments:


















Non-cash asset impairment charges

0.01



-





0.01



0.01






Net gain on real estate transactions

(0.03)



-





(0.03)



-






Insurance deductibles for hail storm damage

0.07



-





0.07



-







Adjusted diluted income per share (1)

$          1.25



$          1.03



21.4


$           2.23



$           1.67



33.5




















SG&A RECONCILIATION:




































As reported

$    214,327



$    183,051



17.1


$     413,439



$     358,935



15.2


  Pre-tax Adjustments:


















Net gain on real estate transactions

1,071



-





1,071



-






Insurance deductibles for hail storm damage

(2,650)



-





(2,650)



-







Adjusted SG&A (1)

$    212,748



$    183,051



16.2


$     411,860



$     358,935



14.7




















SG&A AS % REVENUES:




































Unadjusted

11.3



12.4





11.6



12.4





Adjusted (1)

11.2



12.4





11.6



12.4























SG&A AS % OF GROSS PROFIT:




































Unadjusted

75.1



75.0





75.8



77.0





Adjusted (1)

74.6



75.0





75.5



77.0