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UnitedAuto Reports Record Third Quarter Revenues and Earnings
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UnitedAuto Reports Record Third Quarter Revenues and Earnings

14th Consecutive Quarter of Same Store Revenue Growth

Income From Continuing Operations Increased 70%

Earnings Per Share From Continuing Operations Increased 46%

DETROIT, MI, October 29, 2002 - United Auto Group, Inc. (NYSE: UAG), a FORTUNE 500 automotive specialty retailer, today announced record results for third quarter 2002 with double-digit growth in revenues, income and earnings per share. The record results were driven by strong retail vehicle, service and parts, and finance and insurance revenues, which increased 38%, 36% and 30%, respectively, and reduced borrowing costs.

Third quarter revenues increased 37% to $2.1 billion, and income and earnings per share from continuing operations increased 70% and 46% to $22.6 million and $0.54, respectively. Earnings per share reflect an 18% increase in weighted average shares outstanding. Excluding the effect of goodwill amortization in the third quarter 2001, income from continuing operations and related earnings per share increased 40% and 17%, respectively, over the prior year.

For the nine months ended September 30, 2002, revenues increased 28% to $5.6 billion and income and earnings per share from continuing operations increased 85% and 51% to $60.9 million and $1.48, respectively. Earnings per share reflect a 23% increase in weighted average shares outstanding. Excluding the effect of goodwill amortization in the nine months 2001, income from continuing operations and related earnings per share increased 48% and 20%, respectively, over the prior year.

Chairman Roger Penske commented, "I am delighted with the performance of UnitedAuto during the third quarter. Our business continues to demonstrate its resiliency because of its diverse revenue streams and our variable cost structure. We also continue to see the benefits of our facility investment program which is paying dividends as reflected by our industry-leading same store sales growth. Our same store high margin service and parts business continued its steady growth, increasing 6.3% during the third quarter, while overall service and parts gross margin increased 250 basis points. I remain optimistic about our business over the balance of the year, and our earnings guidance of $1.82 - 1.86 per share from continuing operations remains unchanged."

President Sam DiFeo stated, "I believe our consistent same store growth is the result of our customer satisfaction focus which drives repeat and referral business. Same store retail revenue increased 7.4%, and related retail gross profit also increased by 6.1%. We also achieved same store revenue growth for both our domestic and foreign nameplates. I am convinced that our customer focus will yield increasing dividends in the future."

Periodically, the Company examines its dealership portfolio and divests of dealerships that are not strategic. During 2002, the Company has divested or has entered into definitive agreements to divest five dealerships, which have been treated as discontinued operations in accordance with Statement of Financial Accounting Standards No. 144. Including the impact of the divested dealership operations, net income and earnings per share were $22.0 million and $0.53 per share, respectively, in the third quarter and $61.6 million and $1.50 per share for the nine months.

UnitedAuto, which has pursued a strategy based on internal growth from its existing dealerships, as well as from strategic acquisitions, operates 126 franchises in the United States and 71 franchises internationally, primarily in the United Kingdom. UnitedAuto dealerships sell new and used vehicles, and market a complete line of aftermarket automotive products and services.

UnitedAuto will host a conference call discussing financial results relating to third quarter 2002 on Tuesday, October 29, 2002 at 2 P.M. Eastern time. Advance registration is not required. Participants must call (800) 230-1096 (International, please call (612) 332-0107). Calls need to be made shortly before the call is to commence. Please provide the leader's name - Roger Penske - as well as the code UAG3Q. The conference call cannot be accessed without this information. The call will also be simultaneously broadcast live over the Internet through the UnitedAuto website at www.unitedauto.com.

Statements in this press release may involve forward-looking statements, including forward-looking statements regarding UnitedAuto's future reportable sales and earnings growth potential. Actual results may vary materially because of external factors such as interest rate fluctuations, changes in consumer spending and other factors over which management has no control. These forward-looking statements should be evaluated together with additional information about UnitedAuto's business, markets, conditions and other uncertainties, which could affect UnitedAuto's future performance, which are contained in UnitedAuto's filings with the Securities and Exchange Commission and which are incorporated into this press release by reference.

UnitedAuto Reports Record Third Quarter Revenues and Earnings

14th Consecutive Quarter of Same Store Revenue Growth

Income From Continuing Operations Increased 70%

Earnings Per Share From Continuing Operations Increased 46%

UNITED AUTO GROUP, INC.
Consolidated Statements of Income (Unaudited)
(Amounts In Thousands, Except Per Share Data)

 
Three Months Ended
September 30,
Nine Months Ended
September 30,
 
2002
2001
2002
2001

New Vehicles

$1,227,100

$914,577

$3,303,753

$2,618,117

Used Vehicles

411,161

272,765

1,106,603

807,329

Finance and Insurance

49,920

38,306

133,283

106,705

Service and Parts

207,586

152,247

565,221

435,614

Fleet

32,604

37,097

93,355

119,061

Wholesale

131,232

91,059

355,422

263,463

   Total Revenues

2,059,603

1,506,051

5,557,637

4,350,289

Cost of Sales

1,771,953

1,294,050

4,767,825

3,745,316

   Gross Profit

287,650

212,001

789,812

604,973

SG&A Expenses

229,803

171,411

631,596

487,364

   Operating Income

57,847

40,590

158,216

117,609

Floor Plan Interest Expense

(9,082)

(8,998)

(26,023)

(31,577)

Other Interest Expense

(9,990)

(7,992)

(27,834)

(27,217)

   Income from Continuing
   Operations Before
   Minority Interests and
   Income Taxes

38,775

23,600

104,359

58,815

Minority Interests

(458)

(66)

(1,383)

(364)

Income Tax Provision

(15,704)

(10,266)

(42,035)

(25,583)

   Income from Continuing
   Operations

22,613

13,268

60,941

32,868

Income (Loss) of
   Discontinued Operations,
   Net of Tax (Including
   Gain on Disposal of
   $499)

(624)

220

648

595

   Net Income

$21,989

$13,488

$61,589

$33,463

Income from Continuing
   Operations Per Diluted
   Share

$0.54

$0.37

$1.48

$0.98

Diluted Earnings Per Share

0.53

$0.38

$1.50

$1.00

Diluted Weighted Average
   Shares Outstanding
41,733
35,418
41,168
33,550
EBITDA (a)
$54,221
$40,159
$147,955
$110,277


Same Store Retail Revenue

New Vehicles
$980,992
$898,629
$2,546,520
$2,380,496
Used Vehicles
271,701
266,744
729,399
729,157
Finance and Insurance
37,077
33,605
97,395
88,614
Service and Parts
158,898
149,520
424,708
399,873
   Total
$1,448,668
$1,348,498
$3,798,022
$3,598,140

 

  1. EBITDA is defined as income from continuing operations before minority interests, income tax provision, other interest expense, depreciation and amortization. Depreciation was $5.5 million and $3.6 million in the three months ended September 30, 2002 and 2001, respectively, and was $15.8 million and $9.7 million in the nine months ended September 30, 2002 and 2001, respectively. Amortization was $5.0 and $14.6 million in the three and nine months ended September 30, 2001, respectively.

UNITED AUTO GROUP, INC.
Consolidated Condensed Balance Sheets
(Amounts In Thousands)

9/30/02
12/31/01
Assets
(unaudited)
Cash and Cash Equivalents
$685
$2,952
Accounts Receivable, Net
305,313
239,610
Inventories
885,805
611,889
Other Current Assets
33,821
16,081
   Total Current Assets
1,225,624
870,532
Property and Equipment, Net
274,259
181,290
Intangible Assets, Net
957,390
772,737
Other Assets
75,932
84,098
   Total Assets
$2,533,205
$1,908,657
Liabilities and Stockholders' Equity
Floor Plan Notes Payable
$790,850
$586,620
Accounts Payable and Accrued Expenses
300,241
157,730
Current Portion Long - Term Debt
9,217
4,202
   Total Current Liabilities
1,100,308
748,552
Long - Term Debt (a)
646,793
551,648
Other Liabilities
96,703
92,774
   Total Liabilities
1,843,804
1,392,974
Stockholders' Equity
689,401
515,683
Total Liabilities and Stockholders' Equity
$2,533,205
$1,908,657
  1. Includes $300.0 million of 9.625% subordinated notes. Undrawn capacity under the Company's credit facility was $358.7 million as of September 30, 2002.

UNITED AUTO GROUP, INC.
Selected Data

Three Months Ended September 30,

Nine Months Ended September 30,

2002

2001

2002

2001

Units

 

 

New Retail Units

44,432
35,351

119,962

100,016

Used Retail Units

20,792
16,792

58,092

49,278

Total Retail Units

65,224
52,143

178,054

149,294

 

 

Revenue Mix

 

 

New Vehicles

59.5%
60.7%

59.4%

60.2%

Used Vehicles

20.0%
18.1%

19.9%

18.5%

Finance and Insurance

2.4%
2.5%

2.4%

2.5%

Service and Parts

10.1%
10.1%

10.2%

10.0%

Fleet

1.6%
2.5%

1.7%

2.7%

Wholesale

6.4%
6.1%

6.4%

6.1%

 

 

Retail Gross Margin - by Product

 

 

New Vehicles

8.2%
8.4%

8.5%

8.3%

Used Vehicles

9.7%
10.7%

10.2%

10.6%

Finance and Insurance

100.0%
100.0%

100.0%

100.0%

Service and Parts

47.3%
44.8%

46.9%

44.7%

 

 

Gross Profit per Transaction

 

 

New Vehicles

$2,270
$2,167

$2,329

$2,179

Used Vehicles

1,915
1,737

1,943

1,731

Finance and Insurance

765
735

742

715

 

 

Same Store Retail Revenue Growth

 

 

New Vehicles

9.2%
5.1%

7.0%

7.1%

Used Vehicles

1.9%
4.9%

--%

2.7%

Finance and Insurance

10.3%
22.6%

9.9%

16.5%

Service and Parts

6.3%
7.7%

6.2%

4.7%

 

 

Debt to Total Capital Ratio

49%
53%

49%

53%

   

Media Contact:
Phillip M. Hartz
Senior VP - Corporate Communications
248-648-2610