Group 1 Automotive Reports Strong Third-Quarter Earnings Results Despite Ongoing Japanese-Brand Vehicle Supply Shortages

HOUSTON, Oct. 25, 2011 /PRNewswire/ -- Group 1 Automotive, Inc. (NYSE: GPI), a Fortune 500 automotive retailer, today 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.

Third-Quarter Highlights

  • 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.”

Year-to-Date Results

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.

Share Repurchases

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.

Third-Quarter Earnings Conference Call

Group 1’s senior management will host a conference call today at 10 a.m. ET to discuss the third-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: 10004929

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

Domestic: 1.877.344.7529
International: 1.412.317.0088
Conference ID: 10004929

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.

Investor contacts:
Kim Paper Canning
Manager, Investor Relations
Group 1 Automotive Inc.
713-647-5741 | kpaper@group1auto.com

Media contacts:
Pete DeLongchamps
V.P. Manufacturer Relations and Public Affairs
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 September 30,


Nine Months Ended September 30,



2011



2010



% Change



2011



2010



% Change


REVENUES:


















New vehicle retail sales

$  862,660



$  822,121



           4.9

%


$ 2,457,255



$ 2,254,093



           9.0

%

Used vehicle retail sales

    377,115



    340,625



         10.7



   1,053,609



      960,376



           9.7


Used vehicle wholesale sales

      69,051



      58,463



         18.1



      191,609



      156,653



         22.3


Parts and service

    210,067



    196,264



           7.0



      609,108



      575,762



           5.8


Finance and insurance

      51,496



      44,282



         16.3



      142,255



      124,533



         14.2



Total revenues

 1,570,389



 1,461,755



           7.4



   4,453,836



   4,071,417



           9.4





















COST OF SALES:


















New vehicle retail sales

    806,498



    775,046



           4.1



   2,304,057



   2,122,533



           8.6


Used vehicle retail sales

    345,048



    310,055



         11.3



      958,094



      870,823



         10.0


Used vehicle wholesale sales

      69,254



      58,158



         19.1



      187,651



      153,565



         22.2


Parts and service

    100,836



      89,657



         12.5



      289,295



      264,484



           9.4



Total cost of sales

 1,321,636



 1,232,916



           7.2



   3,739,097



   3,411,405



           9.6





















GROSS PROFIT

    248,753



    228,839



           8.7



      714,739



      660,012



           8.3





















SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

    188,185



    173,925



           8.2



      547,120



      522,796



           4.7





















DEPRECIATION AND AMORTIZATION EXPENSE

        6,845



        6,772



           1.1



        19,881



        19,936



          (0.3)





















ASSET IMPAIRMENTS

        3,644



        1,639



       122.3



          4,008



          3,121



         28.4





















OPERATING INCOME

      50,079



      46,503



           7.7



      143,730



      114,159



         25.9





















OTHER EXPENSE:


















Floorplan interest expense

      (6,964)



      (9,021)



        (22.8)



      (20,245)



      (25,220)



        (19.7)





















Other interest expense, net

      (8,644)



      (6,894)



         25.4



      (24,811)



      (20,265)



         22.4





















Loss on redemption of long-term debt

              -  



              -  



             -  



                -  



        (3,872)



      (100.0)





















INCOME BEFORE INCOME TAXES

      34,471



      30,588



         12.7



        98,674



        64,802



         52.3





















PROVISION FOR INCOME TAXES

    (12,977)



    (11,603)



         11.8



      (37,135)



      (25,067)



         48.1





















NET INCOME

$    21,494



$    18,985



         13.2

%


$      61,539



$      39,735



         54.9

%







































DILUTED INCOME PER SHARE

$        0.94



$        0.83



         13.3

%


$          2.67



$          1.70



         57.1

%




















Weighted average dilutive shares outstanding

      22,778



      22,926



          (0.6)

%


        23,073



        23,414



          (1.5)

%




















Dilutive shares outstanding, net of treasury stock, at September 30

      21,920



      22,860



          (4.1)

%


        21,920



        22,860



          (4.1)

%



Group 1 Automotive, Inc.

Consolidated Balance Sheets

(Dollars in thousands)








September 30,


December 31,








2011


2010


% Change

ASSETS:



(Unaudited)














CURRENT ASSETS:









Cash and cash equivalents


$            11,300


$          19,843


 (43.1)

%


Contracts in transit and vehicle receivables, net


            100,246


          113,846


 (11.9)



Accounts and notes receivable, net


              71,496


            75,623


   (5.5)



Inventories


            719,677


          777,771


   (7.5)



Deferred income taxes


              16,482


            14,819


   11.2



Prepaid expenses and other current assets


              18,232


            17,332


     5.2




Total current assets


            937,433


       1,019,234


   (8.0)


PROPERTY AND EQUIPMENT, net


            550,908


          506,288


     8.8


GOODWILL AND INTANGIBLE FRANCHISE RIGHTS


            693,305


          666,656


     4.0


OTHER ASSETS


              13,656


              9,786


   39.5




Total assets


$       2,195,302


$     2,201,964


   (0.3)

%











LIABILITIES AND STOCKHOLDERS' EQUITY:


















CURRENT LIABILITIES:









Floorplan notes payable - credit facility


$          553,871


$        690,051


 (19.7)

%



Offset account related to floorplan notes payable - credit facility


          (116,819)


         (129,211)


   (9.6)



Floorplan notes payable - manufacturer affiliates


            122,358


          103,345


   18.4



Current maturities of long-term debt


              14,003


            53,189


 (73.7)



Current liabilities from interest rate risk management activities


                7,656


              1,098


 597.3



Accounts payable


            128,490


            92,799


   38.5



Accrued expenses


              92,360


            83,663


   10.4




Total current liabilities


            801,919


          894,934


 (10.4)


2.25% CONVERTIBLE SENIOR NOTES (aggregate principal of









$182,753 at September 30, 2011 and December 31, 2010)


            143,228


          138,155


     3.7


3.00% CONVERTIBLE SENIOR NOTES (aggregate principal of









$115,000 at September 30, 2011 and December 31, 2010)


              76,617


            74,365


     3.0


MORTGAGE FACILITY, net of current maturities


              39,405


                    -  


 100.0


OTHER REAL ESTATE RELATED AND LONG-TERM DEBT,









net of current maturities


            176,275


          161,611


     9.1


CAPITAL LEASE OBLIGATIONS RELATED TO REAL ESTATE,









net of current maturities


              37,668


            38,819


   (3.0)


DEFERRED INCOME TAXES


              70,929


            58,970


   20.3


LIABILITIES FROM INTEREST RATE RISK MANAGEMENT ACTIVITIES


              25,112


            16,426


   52.9


OTHER LIABILITIES


              33,252


            31,036


     7.1


DEFERRED REVENUES


                2,133


              3,280


 (35.0)












STOCKHOLDERS' EQUITY:









Common stock


                   262


                 261


     0.4



Additional paid-in capital


            368,776


          363,966


     1.3



Retained earnings


            573,120


          519,843


   10.2



Accumulated other comprehensive loss


            (27,986)


           (18,755)


   49.2



Treasury stock


          (125,408)


           (80,947)


   54.9




Total stockholders' equity


            788,764


          784,368


     0.6




Total liabilities and stockholders' equity


$       2,195,302


$     2,201,964


   (0.3)

%



Group 1 Automotive, Inc.

Consolidated Statements of Adjusted Cash Flows from Operating Activities

(Unaudited)

(In thousands)







Three Months Ended September 30,


Nine Months Ended September 30,




2011


2010


% Change


2011


2010


% Change


















Net income


$ 21,494


$ 18,985


    13.2

%


$   61,539


$   39,735


         54.9

%

Adjustments to reconcile net income to net cash provided by operating activities:
















Asset impairments


     3,644


     1,639


  122.3



       4,008


       3,121


         28.4



Depreciation and amortization


     6,845


     6,772


      1.1



     19,881


     19,936


          (0.3)



Deferred income taxes


     2,170


   10,062


   (78.4)



     16,280


     22,224


        (26.7)



Loss on redemption of long-term debt


             -


             -


          -



               -


       3,872


      (100.0)



(Gain) loss on disposition of assets and franchise


      (181)


   (1,282)


   (85.9)



        (967)


       3,170


      (130.5)



Stock-based compensation


     2,775


     2,329


    19.1



       8,333


       7,505


         11.0



Amortization of debt discount and issue costs


     3,023


     2,379


    27.1



       8,871


       6,336


         40.0



Other


          87


        416


   (79.1)



          (15)


          854


      (101.8)


Changes in operating assets and liabilities, net of effects of  acquisitions and dispositions:
















Accounts payable and accrued expenses


   14,833


   (6,075)


  344.2



     39,722


       9,624


       312.7



Accounts and notes receivable


        (55)


     1,572


 (103.5)



       3,908


     (4,747)


       182.3



Inventories


   58,901


 (58,570)


  200.6



   111,704


 (152,947)


       173.0



Contracts-in-transit and vehicle receivables


     5,398


   18,893


   (71.4)



     13,525


     (5,888)


       329.7



Prepaid expenses and other assets


   (4,477)


     5,266


 (185.0)



     (3,454)


       7,060


      (148.9)



Floorplan notes payable - credit facility (1)


 (83,371)


   52,865


 (257.7)



 (156,657)


   160,080


      (197.9)



Floorplan notes payable - manufacturer affiliates (2)


 (13,416)


     2,296


 (684.3)



     (7,550)


   (12,491)


        (39.6)



Deferred revenues


      (297)


      (816)


   (63.6)



     (1,245)


     (1,759)


        (29.2)


Adjusted net cash provided by operating activities


$ 17,373


$ 56,731


   (69.4)

%


$ 117,883


$ 105,685


         11.5

%



















   (1)

Excludes net acquisition/(disposition) related activity of $20,476 for the nine months ended September 30, 2011, and $4,729 for the nine months ended September 30, 2010.


   (2)

Excludes net acquisition/(disposition) related activity of $26,578 for the nine months ended September 30, 2011, and $2,210 for the nine months ended September 30, 2010.




Group 1 Automotive, Inc.

Additional Information - Consolidated

(Unaudited)


















Three Months Ended


Nine Months Ended




September 30,


September 30,




2011


2010


2011


2010

NEW VEHICLE UNIT SALES GEOGRAPHIC MIX:













Region

Geographic Market













East

Massachusetts

   11.2

%


   14.6

%


   11.6

%


   14.8

%



New Jersey

     4.8



     6.1



     5.5



     6.5




New York

     3.5



     3.7



     3.7



     3.8




Georgia

     3.1



     4.1



     3.5



     3.9




New Hampshire

     2.8



     4.0



     3.1



     4.2




Louisiana

     2.7



     3.3



     3.0



     3.1




Mississippi

     2.0



     1.7



     2.0



     1.7




South Carolina

     1.4



     1.6



     1.4



     1.1




Alabama

     1.4



     1.2



     1.2



     1.3




Maryland

     0.7



     0.8



     0.8



     0.8




Florida

     0.7



     0.8



     0.7



     1.4





   34.3



   41.9



   36.5



   42.6

















West

Texas

   38.2



   30.9



   34.9



   30.8




California

   12.9



   14.0



   14.0



   13.4




Oklahoma

     8.5



     7.7



     8.3



     7.9




Kansas

     0.9



     0.8



     1.0



     0.9





   60.5



   53.4



   58.2



   53.0

















International

United Kingdom

     5.2



     4.7



     5.3



     4.4





 100.0

%


 100.0

%


 100.0

%


 100.0

%















NEW VEHICLE UNIT SALES BRAND MIX:













Toyota/Scion/Lexus


   28.7

%


   36.5

%


   30.6

%


   35.5

%


Nissan/Infiniti


   15.2



   14.1



   14.0



   14.6



BMW/MINI


   13.1



   11.9



   13.2



   11.3



Ford


   10.1



     7.2



     8.5



     8.0



Honda/Acura


     9.3



   11.8



   11.1



   12.2



GM


     6.2



     3.9



     5.3



     4.0



Daimler


     5.0



     5.7



     5.5



     5.6



Chrysler


     5.0



     3.0



     4.5



     2.9



Other


     7.4



     5.9



     7.3



     5.9





 100.0

%


 100.0

%


 100.0

%


 100.0

%















NEW VEHICLE UNIT SALES OTHER MIX:













Import


   52.1

%


   58.8

%


   54.3

%


   58.3

%


Luxury


   26.7



   27.1



   27.6



   27.0



Domestic


   21.2



   14.1



   18.1



   14.7





 100.0

%


 100.0

%


 100.0

%


 100.0

%
















Car


   53.5

%


   59.4

%


   55.1

%


   58.8

%


Truck


   46.5



   40.6



   44.9



   41.2





 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 September 30,


Nine Months Ended September 30,




2011


2010


% Change


2011


2010


% Change

REVENUES:



















New vehicle retail sales

$    862,660



$    822,121



      4.9

%


$ 2,457,255



$ 2,254,093



    9.0

%


Used vehicle retail sales

      377,115



      340,625



    10.7



   1,053,609



      960,376



    9.7



Used vehicle wholesale sales

        69,051



        58,463



    18.1



      191,609



      156,653



  22.3




Total used

      446,166



      399,088



    11.8



   1,245,218



   1,117,029



  11.5



Parts and service

      210,067



      196,264



      7.0



      609,108



      575,762



    5.8



Finance and insurance

        51,496



        44,282



    16.3



      142,255



      124,533



  14.2




Total

$ 1,570,389



$ 1,461,755



      7.4

%


$ 4,453,836



$ 4,071,417



    9.4

%





















GROSS MARGIN:



















New vehicle retail sales

              6.5

%


              5.7

%





              6.2

%


              5.8

%





Used vehicle retail sales

              8.5



              9.0






              9.1



              9.3






Used vehicle wholesale sales

            (0.3)



              0.5






              2.1



              2.0







Total used

              7.1



              7.7






              8.0



              8.3






Parts and service

            52.0



            54.3






            52.5



            54.1






Finance and insurance

          100.0



          100.0






          100.0



          100.0







Total

            15.8

%


            15.7

%





            16.0

%


            16.2

%
























GROSS PROFIT:



















New vehicle retail sales

$      56,162



$      47,075



    19.3

%


$    153,198



$    131,560



  16.4

%


Used vehicle retail sales

        32,067



        30,570



      4.9



        95,515



        89,553



    6.7



Used vehicle wholesale sales

           (203)



             305



 (166.6)



          3,958



          3,088



  28.2




Total used

        31,864



        30,875



      3.2



        99,473



        92,641



    7.4



Parts and service

      109,231



      106,607



      2.5



      319,813



      311,278



    2.7



Finance and insurance

        51,496



        44,282



    16.3



      142,255



      124,533



  14.2




Total

$    248,753



$    228,839



      8.7

%


$    714,739



$    660,012



    8.3

%





















UNITS SOLD:



















Retail new vehicles sold

        25,777



        26,396



     (2.3)

%


        74,578



        72,128



    3.4

%


Retail used vehicles sold

        18,770



        17,601



      6.6



        52,700



        50,230



    4.9



Wholesale used vehicles sold

          9,697



          9,308



      4.2



        27,246



        24,716



  10.2




Total used

        28,467



        26,909



      5.8

%


        79,946



        74,946



    6.7

%





















AVERAGE SALES PRICE:



















New vehicle retail

$      33,466



$      31,146



      7.4

%


$      32,949



$      31,251



    5.4

%


Used vehicle retail

$      20,091



$      19,353



      3.8

%


$      19,993



$      19,120



    4.6

%





















GROSS PROFIT PER UNIT SOLD:



















New vehicle retail sales

$        2,179



$        1,783



    22.2

%


$        2,054



$        1,824



  12.6

%


Used vehicle retail sales

          1,708



          1,737



     (1.7)



          1,812



          1,783



    1.6



Used vehicle wholesale sales

             (21)



               33



 (163.6)



             145



             125



  16.0




Total used

          1,119



          1,147



     (2.4)



          1,244



          1,236



    0.6



Finance and insurance (per retail unit)

$        1,156



$        1,006



    14.9

%


$        1,118



$        1,018



    9.8

%





















OTHER (1):



















SG&A expenses

$    188,185



$    175,225



      7.4

%


$    547,120



$    518,481



    5.5

%


SG&A as % revenues

            12.0

%


            12.0

%





            12.3

%


            12.7

%





SG&A as % gross profit

            75.7

%


            76.6

%





            76.5

%


            78.6

%





Operating margin

              3.4

%


              3.2

%





              3.3

%


              3.0

%





Pretax margin

              2.4

%


              2.1

%





              2.3

%


              1.9

%
























FLOORPLAN EXPENSE:



















Floorplan interest

$      (6,964)



$      (9,021)



   (22.8)

%


$    (20,245)



$    (25,220)



 (19.7)

%


Floorplan assistance

          6,740



          6,512



      3.5



        18,836



        17,836



    5.6




Net floorplan expense

$         (224)



$      (2,509)



   (91.1)

%


$      (1,409)



$      (7,384)



 (80.9)

%























         (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 September 30,


Nine Months Ended September 30,




2011


2010


% Change


2011


2010


% Change

REVENUES:



















New vehicle retail sales

$    818,269



$    818,645



     (0.0)

%


$ 2,369,672



$ 2,225,429



    6.5

%


Used vehicle retail sales

      361,511



      339,094



      6.6



   1,016,231



      952,124



    6.7



Used vehicle wholesale sales

        66,018



        58,140



    13.6



      184,630



      154,188



  19.7




Total used

      427,529



      397,234



      7.6



   1,200,861



   1,106,312



    8.5



Parts and service

      199,744



      195,416



      2.2



      584,251



      566,294



    3.2



Finance and insurance

        48,913



        44,107



    10.9



      137,759



      123,194



  11.8




Total

$ 1,494,455



$ 1,455,402



      2.7

%


$ 4,292,543



$ 4,021,229



    6.7

%





















GROSS MARGIN:



















New vehicle retail sales

              6.6

%


              5.7

%





              6.3

%


              5.8

%





Used vehicle retail sales

              8.5



              9.0






              9.1



              9.3






Used vehicle wholesale sales

            (0.1)



              0.6






              2.2



              2.1







Total used

              7.1



              7.7






              8.0



              8.3






Parts and service

            52.8



            54.3






            53.1



            54.2






Finance and insurance

          100.0



          100.0






          100.0



          100.0







Total

            16.0

%


            15.7

%





            16.1

%


            16.2

%
























GROSS PROFIT:



















New vehicle retail sales

$      54,035



$      46,832



    15.4

%


$    148,692



$    129,977



  14.4

%


Used vehicle retail sales

        30,572



        30,421



      0.5



        92,255



        88,915



    3.8



Used vehicle wholesale sales

             (79)



             358



 (122.1)



          4,096



          3,211



  27.6




Total used

        30,493



        30,779



     (0.9)



        96,351



        92,126



    4.6



Parts and service

      105,453



      106,136



     (0.6)



      310,431



      306,756



    1.2



Finance and insurance

        48,913



        44,107



    10.9



      137,759



      123,194



  11.8




Total

$    238,894



$    227,854



      4.8

%


$    693,233



$    652,053



    6.3

%





















UNITS SOLD:



















Retail new vehicles sold

        24,427



        26,298



     (7.1)

%


        71,807



        71,300



    0.7

%


Retail used vehicles sold

        17,939



        17,487



      2.6



        50,809



        49,699



    2.2



Wholesale used vehicles sold

          9,222



          9,264



     (0.5)



        26,210



        24,415



    7.4




Total used

        27,161



        26,751



      1.5

%


        77,019



        74,114



    3.9

%





















AVERAGE SALES PRICE:



















New vehicle retail

$      33,499



$      31,130



      7.6

%


$      33,001



$      31,212



    5.7

%


Used vehicle retail

$      20,152



$      19,391



      3.9

%


$      20,001



$      19,158



    4.4

%





















GROSS PROFIT PER UNIT SOLD:



















New vehicle retail sales

$        2,212



$        1,781



    24.2

%


$        2,071



$        1,823



  13.6

%


Used vehicle retail sales

          1,704



          1,740



     (2.1)



          1,816



          1,789



    1.5



Used vehicle wholesale sales

               (9)



               39



 (123.1)



             156



             132



  18.2




Total used

          1,123



          1,151



     (2.4)



          1,251



          1,243



    0.6



Finance and insurance (per retail unit)

$        1,155



$        1,007



    14.7

%


$        1,123



$        1,018



  10.3

%





















OTHER:




















SG&A expenses

$180,417



$173,389



      4.1

%


$528,971



$508,427



    4.0

%


SG&A as % revenues

            12.1

%


            11.9

%





            12.3

%


            12.6

%





SG&A as % gross profit

            75.5

%


            76.1

%





            76.3

%


            78.0

%





Operating margin (2)

              3.5

%


              3.3

%





              3.4

%


              3.1

%
























FLOORPLAN EXPENSE:



















Floorplan interest

$      (6,606)



$      (8,961)



   (26.3)

%


$    (19,576)



$    (24,884)



 (21.3)

%


Floorplan assistance

          6,404



          6,462



     (0.9)



        18,292



        17,534



    4.3




Net floorplan expense

$         (202)



$      (2,499)



   (91.9)

%


$      (1,284)



$      (7,350)



 (82.5)

%























(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 September 30,



Nine Months Ended September 30,


NET INCOME RECONCILIATION:

2011



2010



% Change



2011



2010



% Change
























As reported

$   21,494



$   18,985



         13.2

%


$   61,539



$   39,735



         54.9

%


 After-tax Adjustments:




















Non-Cash asset impairment charges (2)

       2,309



       1,033






       2,534



       1,983







Loss on dealership dispositions (3)

             -  



             -  






             -  



       3,698







Loss on debt redemption (4)

             -  



             -  






             -  



       2,458







Severance costs related to UK-dealership acquisitions (5)

             -  



             -  






             -  



          405







Gain on sale of real estate (6)

             -  



        (761)









        (761)








Adjusted net income (1)

$   23,803



$   19,257



         23.6

%


$   64,073



$   47,518



         34.8

%








DILUTED INCOME PER SHARE RECONCILIATION:








































As reported

$       0.94



$       0.83



         13.3

%


$       2.67



$       1.70



         57.1

%


 After-tax Adjustments:




















Non-Cash asset impairment charges

         0.10



         0.04






         0.11



         0.08







Loss on dealership dispositions

             -  



             -  






             -  



         0.15







Loss on debt redemption

             -  



             -  






             -  



         0.10







Severance costs related to UK-dealership acquisitions

             -  



             -  






             -  



         0.02







Gain on sale of real estate

             -  



       (0.03)






             -  



       (0.03)








Adjusted diluted income per share (1)

$       1.04



$       0.84



         23.8

%


$       2.78



$       2.02



         37.6

%






















SG&A RECONCILIATION:








































As reported

$ 188,185



$ 173,925



           8.2

%


$ 547,120



$ 522,796



           4.7

%


 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






             -  



       1,300








Adjusted SG&A (1)

$ 188,185



$ 175,225



           7.4

%


$ 547,120



$ 518,481



           5.5

%






















SG&A AS % REVENUES:








































Unadjusted

         12.0

%


         11.9

%





         12.3

%


         12.8

%





Adjusted (1)

         12.0

%


         12.0

%





         12.3

%


         12.7

%

























SG&A AS % OF GROSS PROFIT:








































Unadjusted

         75.7

%


         76.0

%





         76.5

%


         79.2

%





Adjusted (1)

         75.7

%


         76.6

%





         76.5

%


         78.6

%

























OPERATING MARGIN:








































Unadjusted

           3.2

%


           3.2

%





           3.2

%


           2.8

%





Adjusted (1), (7)

           3.4

%


           3.2

%





           3.3

%


           3.0

%

























SAME STORE OPERATING MARGIN:








































Unadjusted

           3.2

%


           3.2

%





           3.3

%


           3.0

%





Adjusted (1), (9)

           3.5

%


           3.3

%





           3.4

%


           3.1

%

























PRETAX MARGIN:








































Unadjusted

           2.2

%


           2.1

%





           2.2

%


           1.6

%





Adjusted (1), (8)

           2.4

%


           2.1

%





           2.3

%


           1.9

%





























Three Months Ended September 30,



Nine Months Ended September 30,


CASH FLOWS FROM OPERATING ACTIVITIES

2011



2010



% Change



2011



2010



% Change


RECONCILIATION:



















Net cash provided by (used in) operating activities

$ 100,744



$     3,866



    2,505.9

%


$ 301,118



$ (52,185)



       677.0

%



Change in floorplan notes payable-credit facility, excluding floorplan offset account and net acquisition and disposition related activity

   (83,371)



     52,865






 (156,657)



   160,080







Change in floorplan notes payable-manufacturer affiliates associated with net acquisition and disposition related activity

               -



               -






   (26,578)



     (2,210)








Adjusted net cash provided by operating activities (1)

$   17,373



$   56,731



        (69.4)

%


$ 117,883



$ 105,685



         11.5

%
























(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 $1,335 and $1,474 for the three and nine months ended September 30, 2011, respectively, and $606 and $1,138 for the three and nine months ended September 30, 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 nine months ended September 30, 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 nine months ended September 30, 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 nine months ended September 30, 2010 and is calculated utilizing the applicable UK corporate tax rate for the adjustment.


(6)

Adjustment is net of a tax provision of $539 for the three and nine months ended September 30, 2010 and is calculated utilizing the applicable federal and state tax rates for the adjustment.


(7)

Excludes the impact of non-cash asset impairment charges.










(8)

Excludes the impact of non-cash asset impairment charges, loss on dealership dispositions, loss on debt redemption, severance costs related to UK-dealership acquisitions and gain on sale of real estate.


(9)

Excludes the impact of Same Store non-cash asset impairment charges of $3,379 and $3,697 for the three and nine months ended September 30, 2011, respectively, and $1,639 and $1,902 for the three and nine months ended September 30, 2010. Adjusted Same Store operating income was $51,843 and $144,998 for the three and nine months ended September 30, 2011, respectively, and $47,833 and $124,413 for the three and nine months ended September 30, 2010.




SOURCE Group 1 Automotive, Inc.



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