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UnitedAuto Net Income Increases 30%; Revenues Increase 19%; Same-Store Retail Revenue Grows 8%; Earnings Per Share Rises 17% to $0.56 Per Share
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BLOOMFIELD HILLS, Mich.--(BUSINESS WIRE)--Feb. 9, 2005--United Auto Group, Inc. (NYSE: UAG), a FORTUNE 500 automotive specialty retailer, today announced a 30.1% rise in fourth quarter net income and its 23rd consecutive quarter of record results. Fourth quarter results reflect an overall 19.2% increase in revenue, including continued strong same-store retail revenue growth of 7.6%. The same-store growth was highlighted by an 11.8% increase in service and parts revenue, driven by increases in units in operation and capacity increases at many locations. Same-store new and used vehicle retail revenue increased 5.8% and 7.8%, respectively, due primarily to increases at the Company's foreign and luxury franchises. Same-store finance and insurance revenue increased 34.1%, including an 11.7% increase in the sale of traditional finance and insurance products complemented by $9.2 million of revenue earned under a multi-year arrangement to promote satellite radios. Total revenue for the quarter increased to $2.5 billion and net income increased to $26.1 million, or $0.56 per share, from $20.1 million, or $0.48 per share, in the prior year. Earnings per share reflect an 11.0% increase in weighted average shares outstanding.

For the year ended December 31, 2004, revenues increased 17.8% to $9.9 billion. Net income for the year increased 34.7% to $111.7 million, or $2.45 per share, from $82.9 million, or $2.00 per share, in the prior year. Full-year 2004 results include the $7.2 million after-tax gain ($0.16 per share) from the sale of an investment recorded in the second and third quarters. Excluding this gain, net income and earnings per share were $104.5 million and $2.29, respectively. Full-year results also include the $5.3 million after-tax gain ($0.11 per share) from a refund of UK consumption taxes and the $4.9 million of offsetting after-tax non-cash charges recorded in the third quarter ($0.11 per share). Prior year results include the effect of $5.0 million of after-tax non-recurring charges ($0.12 per share).

Commenting on the Company's results, Chairman Roger Penske said, "We are delighted with the performance of our business in 2004. While the overall market remained challenging, our business achieved same-store retail revenue growth of 6.1%, including 7.6% in the fourth quarter. We are pleased that all four lines of our business showed strong same-store growth, including 12.1% growth in our high-margin service and parts operations as our investment in additional capacity continues to reap benefits. I am also particularly pleased with the strong results from our international operations, which generated 26.6% of our 2004 revenues, and enjoyed 22.4% same-store retail revenue growth during the year."

Commenting further Penske said, "In 2005, we expect the overall retail market to remain competitive. With our strong brand mix and service capacity expansion program, we currently estimate same-store growth to be approximately 3% to 5% in 2005. We also expect to continue our selective acquisition program adding approximately $300 to $500 million in annualized revenues. These increases will be somewhat offset by the effect of rising interest rates on our business." Based on these estimates, the Company is currently projecting earnings per share in the range of $2.32 to $2.39 for 2005. Earnings per share in the first quarter are expected to be in the range of $0.44 to $0.48. These estimates are based on an estimated average of 47.0 million shares outstanding.

UnitedAuto will host a conference call discussing financial results relating to fourth quarter 2004 on Wednesday, February 9, 2005 at 1:30 p.m. ET. To listen to the conference call, participants must dial (800) 553-5260 (International, please dial (612) 332-0802). The call will also be simultaneously broadcast live over the Internet through the UnitedAuto website at www.unitedauto.com.

About UnitedAuto

UnitedAuto, which has pursued a strategy based on internal growth from its existing dealerships, as well as from strategic acquisitions, operates 152 franchises in the United States and 101 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. Statements in this press release involve forward-looking statements, including forward-looking statements regarding UnitedAuto's future sales and earnings growth potential. Actual results may vary materially because of risks and uncertainties, including 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 Form 10-K for the year ended December 31, 2003 and its other filings with the Securities and Exchange Commission, and which are incorporated into this press release by reference. This press release speaks only as of its date and UnitedAuto disclaims any duty to update the information herein.

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

                                                   Fourth Quarter
                                               -----------------------
                                                   2004        2003
                                               -----------------------
New Vehicles                                   $1,442,993  $1,239,383
Used Vehicles                                     515,214     432,751
Finance and Insurance                              66,875      46,873
Service and Parts                                 266,765     216,133
Fleet                                              26,215      16,364
Wholesale                                         176,012     141,702
                                               -----------------------
     Total Revenues                             2,494,074   2,093,206
Cost of Sales                                   2,112,477   1,787,535
                                               -----------------------
     Gross Profit                                 381,597     305,671
SG&A Expenses                                     303,811     240,063
Depreciation and Amortization                       9,927       8,392
                                               -----------------------
     Operating Income                              67,859      57,216
Floor Plan Interest Expense                       (13,184)    (11,704)
Other Interest Expense                            (11,686)    (10,629)
                                               -----------------------
     Income from Continuing Operations Before
      Minority Interests and Income Tax
       Provision                                   42,989      34,883
Minority Interests                                   (556)       (589)
Income Tax Provision                              (15,993)    (13,779)
                                               -----------------------
     Income from Continuing Operations             26,440      20,515
Loss from Discontinued Operations, Net of Tax        (325)       (438)
                                               -----------------------
     Net Income                                   $26,115     $20,077
                                               =======================
Income from Continuing Operations Per Diluted
 Share                                              $0.57       $0.49
                                               =======================
Diluted EPS                                         $0.56       $0.48
                                               =======================
Diluted Weighted Average Shares Outstanding        46,689      42,059
                                               =======================



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

                                                    Twelve Months
                                               -----------------------
                                                   2004        2003
                                               -----------------------
New Vehicles                                   $5,683,368  $4,947,931
Used Vehicles                                   2,127,497   1,808,507
Finance and Insurance                             231,830     202,307
Service and Parts                               1,008,519     815,039
Fleet                                             127,993      99,998
Wholesale                                         707,004     515,403
                                               -----------------------
     Total Revenues                             9,886,211   8,389,185
Cost of Sales                                   8,436,153   7,171,332
                                               -----------------------
     Gross Profit                               1,450,058   1,217,853
SG&A Expenses                                   1,144,207     955,021
Depreciation and Amortization                      42,146      30,689
                                               -----------------------
     Operating Income                             263,705     232,143
Floor Plan Interest Expense                       (49,723)    (42,697)
Other Interest Expense                            (42,973)    (42,835)
Other Income                                       11,469          --
                                               -----------------------
     Income from Continuing Operations Before
      Minority Interests and Income Tax
       Provision                                  182,478     146,611
Minority Interests                                 (2,047)     (2,272)
Income Tax Provision                              (67,880)    (57,916)
                                               -----------------------
     Income from Continuing Operations            112,551      86,423
Loss from Discontinued Operations, Net of Tax        (864)       (436)
                                               -----------------------
     Income Before Cumulative Effect of
      Accounting Change                           111,687      85,987
Cumulative Effect of Accounting Change                 --      (3,058)
                                               -----------------------
     Net Income                                  $111,687     $82,929
                                               =======================
Income from Continuing Operations Per Diluted
 Share                                              $2.47       $2.09
                                               =======================
Diluted EPS before Cumulative Effect of
 Accounting Change                                  $2.45       $2.08
                                               =======================
Cumulative Effect of Accounting Change on
 Diluted EPS                                           --      ($0.07)
                                               =======================
Diluted EPS                                         $2.45       $2.00
                                               =======================
Diluted Weighted Average Shares Outstanding        45,613      41,434
                                               =======================



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

                                                 12/31/04    12/31/03
                                               -----------------------
Assets
Cash and Cash Equivalents                         $11,061     $13,076
Accounts Receivable, Net                          382,098     346,367
Inventories                                     1,326,553   1,157,878
Other Current Assets                               44,424      42,963
                                               -----------------------
     Total Current Assets                       1,764,136   1,560,284
Property and Equipment, Net                       414,718     366,070
Intangibles                                     1,247,210   1,083,166
Other Assets                                       87,117      89,007
Assets of Discontinued Operations                  19,620      45,671
                                               -----------------------
     Total Assets                              $3,532,801  $3,144,198
                                               =======================

Liabilities and Stockholders' Equity
Floor Plan Notes Payable                       $1,266,656  $1,114,766
Accounts Payable and Accrued Expenses             413,685     352,480
Current Portion Long-Term Debt                     11,367       8,540
                                               -----------------------
     Total Current Liabilities                  1,691,708   1,475,786
Long-Term Debt                                    574,970     643,145
Other Long-Term Liabilities                       179,116     167,540
Liabilities of Discontinued Operations             11,972      29,315
                                               -----------------------
     Total Liabilities                          2,457,766   2,315,786
Stockholders' Equity                            1,075,035     828,412
                                               -----------------------
    Total Liabilities and Stockholders' Equity $3,532,801  $3,144,198
                                               =======================



                        UNITED AUTO GROUP, INC.
                             Selected Data

                             Fourth Quarter          Twelve Months
                      ------------------------------------------------
                            2004        2003        2004        2003
                      ------------------------------------------------
Units
     New Retail Units      43,612      38,880     178,012     165,023
     Used Retail Units     20,901      19,662      88,700      84,910
                      ------------------------------------------------
          Total Retail
           Units           64,513      58,542     266,712     249,933
                      ================================================

Same-Store Retail
 Revenue
     New Vehicles      $1,296,659  $1,225,376  $4,975,561  $4,706,066
     Used Vehicles        458,463     425,416   1,747,483   1,679,721
     Finance and
      Insurance            62,397      46,518     209,777     194,409
     Service and Parts    237,246     212,263     862,902     769,561
                      ------------------------------------------------
       Total Same-
        Store Retail
        Revenue        $2,054,765  $1,909,573  $7,795,723  $7,349,757
                      ================================================

Same-Store Retail
 Revenue Growth
     New Vehicles             5.8%        8.0%        5.7%        6.6%
     Used Vehicles            7.8%        5.4%        4.0%        7.8%
     Finance and
      Insurance              34.1%        6.6%        7.9%       12.7%
     Service and Parts       11.8%       10.0%       12.1%        8.8%

Revenue Mix
     New Vehicles            57.9%       59.2%       57.5%       59.0%
     Used Vehicles           20.7%       20.7%       21.5%       21.6%
     Finance and
      Insurance               2.7%        2.2%        2.3%        2.4%
     Service and Parts       10.7%       10.3%       10.2%        9.7%
     Fleet                    1.0%        0.8%        1.3%        1.2%
     Wholesale                7.0%        6.8%        7.2%        6.1%

Retail Gross Margin -
 by Product
     New Vehicles             8.8%        8.6%        8.6%        8.4%
     Used Vehicles            8.6%        8.5%        8.8%        9.1%
     Finance and
      Insurance             100.0%      100.0%      100.0%      100.0%
     Service and Parts       54.4%       53.7%       53.9%       53.4%


Gross Profit per
 Transaction
     New Vehicles          $2,897      $2,732      $2,734      $2,517
     Used Vehicles          2,109       1,863       2,113       1,932
     Finance and
      Insurance             1,037         801         870         809




                        UNITED AUTO GROUP, INC.
                       Selected Data (Continued)

                                    Fourth Quarter     Twelve Months
                                 -------------------------------------
                                     2004     2003      2004     2003
                                 -------------------------------------
Brand Mix:
     Toyota/Lexus                      21%      23%       22%      22%
     BMW                               14%      15%       15%      14%
     Honda/Acura                       13%      10%       11%      12%
     Mercedes                          10%      11%       10%      10%
     General Motors                     8%       9%        8%      10%
     Ford Premier Group                 8%       8%        8%       8%
     Audi                               6%       4%        4%       3%
     Chrysler                           4%       6%        5%       6%
     Nissan/Infiniti                    4%       4%        4%       4%
     Ford                               3%       4%        4%       4%
     Other                              9%       6%        9%       7%

Debt to Total Capital Ratio            35%      44%       35%      44%

Adjusted EBITDA (a)               $64,602  $53,904  $267,597 $220,135
Rent Expense                      $27,083  $21,501  $100,697  $81,747



(a) Adjusted EBITDA is defined as income from continuing operations
    before minority interests, income tax provision, other interest
    expense, depreciation and amortization. While Adjusted EBITDA
    should not be construed as a substitute for income from continuing
    operations or as a better measure of liquidity than cash flows
    from operating activities, each of which is determined in
    accordance with U.S. GAAP, it is included in this press release to
    provide additional information regarding the amount of cash our
    business is generating. This measure may not be comparable to
    similarly titled measures reported by other companies. Following
    is a reconciliation of income from continuing operations before
    minority interests and income tax provision and Adjusted EBITDA:

                                       Fourth Quarter   Twelve Months
                                      ---------------- ---------------
                                         2004    2003    2004   2003
                                      ---------------- ---------------
Income from continuing operations
  before minority interests and income
    tax
  provision                            $ 43.0  $ 34.9  $ 182.5 $146.6
Other interest expense                   11.7    10.6     43.0   42.8
Depreciation and amortization             9.9     8.4     42.1   30.7
                                      --------------------------------
Adjusted EBITDA                         $64.6   $53.9   $267.6 $220.1
                                      ================================

    CONTACT: United Auto Group, Inc.
             Roger Penske, 248-648-2400
             or
             Jim Davidson, 201-325-3303
             jdavidson@unitedauto.com
             or
             Investor Relations:
             Tony Pordon, 248-648-2540
             tpordon@unitedauto.com

    SOURCE: United Auto Group, Inc.