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UnitedAuto Revenues Increase 20%; Same-Store Revenues Increase 7.2%; Net Income of $0.71 Per Share; Results Include $0.03 Per Share of Severance Charges

BLOOMFIELD HILLS, Mich.--(BUSINESS WIRE)--July 19, 2005--United Auto Group, Inc. (NYSE: UAG), a FORTUNE 500 automotive specialty retailer, today announced its 25th consecutive quarter of record revenues and a 25 basis-point improvement in gross margin to 14.8%. Total revenue increased 20% to $2.7 billion, including a 7.2% increase in same-store retail revenue. Same-store highlights include:

  • New vehicle retail revenue +8.0%
  • Used vehicle retail revenue +3.7%
  • Service and parts revenue +8.7%
  • Finance and insurance revenue +14.6%

Net income for the quarter was $33.2 million, or $0.71 per share and included $1.2 million ($0.03 per share) of after-tax severance charges as UnitedAuto rationalized its cost structure in certain markets. Second quarter 2004 net income was $33.0 million, or $0.71 per share, and included a $4.0 million ($0.09 per share) after-tax gain resulting from the sale of an investment. Excluding the impact of the severance charges and the gain from investment, adjusted net income increased 18.8% to $34.4 million from $29.0 million in the prior period.

Roger Penske, UnitedAuto Chairman, commented, "We are pleased with the revenue growth and margin expansion we realized across each of our product lines during the second quarter. We continue to achieve impressive growth in our higher margin service and parts departments due, in part, to our capital investment program. Total service and parts revenue increased 22.3% to $281 million in the quarter, helping to drive our gross margin increase." Penske continued, "Our strong sales performance and focus on managing inventory resulted in a 55-days supply of new vehicle inventory in the U.S. compared to a 67-days supply for the U.S. auto industry."

Commenting further Penske said, "The Company is currently projecting earnings per share in the third quarter in the range of $0.66 to $0.71 based on an estimated average of 47.2 million shares outstanding. For the full year, we are raising our earnings per share guidance to a range of $2.37 to $2.44 per share."

UnitedAuto will host a conference call discussing financial results relating to second quarter 2005 on Tuesday, July 19, 2005 at 1:30 p.m. ET. To listen to the conference call, participants must dial (800) 553-0349 (International, please dial (612) 332-0228). The call will 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 143 franchises in the United States and 96 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 is contained in UnitedAuto's Form 10-K for the year ended December 31, 2004, and its other filings with the Securities and Exchange Commission, and which is 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.

This release contains non-GAAP financial measures as defined under SEC rules, such as adjusted net income, which exclude certain items disclosed in the release. The Company has reconciled these measures to the most directly comparable GAAP measures in the release. The Company believes that these non-GAAP financial measures improve the transparency of the Company's disclosure and the period-to-period comparability of the Company's results from operations.

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

                                                   Second Quarter
                                               -----------------------
                                                  2005        2004
                                               ----------- -----------
New Vehicles                                   $1,589,160  $1,316,925
Used Vehicles                                     582,894     503,912
Finance and Insurance                              61,038      49,738
Service and Parts                                 280,749     229,594
Fleet                                              26,288      22,791
Wholesale                                         203,684     163,366
                                               ----------- -----------
  Total Revenues                                2,743,813   2,286,326
Cost of Sales                                   2,338,088   1,953,948
                                               ----------- -----------
  Gross Profit                                    405,725     332,378
SG&A Expenses                                     318,059     256,968
Depreciation and Amortization                      10,404       8,542
                                               ----------- -----------
  Operating Income                                 77,262      66,868
Floor Plan Interest Expense                       (14,201)    (10,511)
Other Interest Expense                            (12,308)    (10,052)
Other Income                                           --       6,611
                                               ----------- -----------
  Income from Continuing Operations Before
   Minority
    Interests and Income Tax Provision             50,753      52,916
Minority Interests                                   (621)       (502)
Income Tax Provision                              (18,725)    (20,549)
                                               ----------- -----------
  Income from Continuing Operations                31,407      31,865
Income from Discontinued Operations, Net of
 Tax                                                1,789       1,138
                                               ----------- -----------
  Net Income                                      $33,196     $33,003
                                               =========== ===========
Income from Continuing Operations Per Diluted
 Share                                              $0.67       $0.68
                                               =========== ===========
Diluted EPS                                         $0.71       $0.71
                                               =========== ===========
Diluted Weighted Average Shares Outstanding        47,041      46,565
                                               =========== ===========



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

                                                     Six Months
                                               -----------------------
                                                  2005        2004
                                               ----------- -----------
New Vehicles                                   $2,991,973  $2,561,238
Used Vehicles                                   1,132,798   1,001,766
Finance and Insurance                             117,339      99,480
Service and Parts                                 553,254     456,347
Fleet                                              54,658      46,307
Wholesale                                         385,908     321,050
                                               ----------- -----------
  Total Revenues                                5,235,930   4,486,188
Cost of Sales                                   4,451,637   3,828,363
                                               ----------- -----------
  Gross Profit                                    784,293     657,825
SG&A Expenses                                     623,704     516,619
Depreciation and Amortization                      20,677      16,782
                                               ----------- -----------
  Operating Income                                139,912     124,424
Floor Plan Interest Expense                       (27,481)    (23,236)
Other Interest Expense                            (23,789)    (20,817)
Other Income                                           --       6,611
                                               ----------- -----------
  Income from Continuing Operations Before
   Minority
    Interests and Income Tax Provision             88,642      86,982
Minority Interests                                   (764)       (822)
Income Tax Provision                              (32,707)    (33,770)
                                               ----------- -----------
  Income from Continuing Operations                55,171      52,390
Income from Discontinued Operations, Net of
 Tax                                                  917         817
                                               ----------- -----------
  Net Income                                      $56,088     $53,207
                                               =========== ===========
Income from Continuing Operations Per Diluted
 Share                                              $1.17       $1.18
                                               =========== ===========
Diluted EPS                                         $1.19       $1.19
                                               =========== ===========
Diluted Weighted Average Shares Outstanding        47,025      44,548
                                               =========== ===========



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

                                                 6/30/05    12/31/04
                                               ----------- -----------
Assets
Cash and Cash Equivalents                         $11,064     $15,187
Accounts Receivable, Net                          408,433     356,625
Inventories                                     1,271,904   1,252,358
Other Current Assets                               60,169      44,315
                                               ----------- -----------
  Total Current Assets                          1,751,570   1,668,485
Property and Equipment, Net                       430,418     406,783
Intangibles                                     1,224,978   1,221,731
Other Assets                                       70,312      86,881
Assets of Discontinued Operations                  94,969     148,921
                                               ----------- -----------
  Total Assets                                 $3,572,247  $3,532,801
                                               =========== ===========

Liabilities and Stockholders' Equity
Floor Plan Notes Payable                       $1,168,460  $1,197,540
Accounts Payable and Accrued Expenses             461,360     402,232
Current Portion Long-Term Debt                      3,561      11,367
                                               ----------- -----------
  Total Current Liabilities                     1,633,381   1,611,139
Long-Term Debt                                    604,576     574,970
Other Long-Term Liabilities                       182,363     179,104
Liabilities of Discontinued Operations             53,459      92,553
                                               ----------- -----------
  Total Liabilities                             2,473,779   2,457,766
Stockholders' Equity                            1,098,468   1,075,035
                                               ----------- -----------
  Total Liabilities and Stockholders' Equity   $3,572,247  $3,532,801
                                               =========== ===========



                        UNITED AUTO GROUP, INC.
                             Selected Data

                           Second Quarter            Six Months
                       ----------------------- -----------------------
                          2005        2004        2005        2004
                       ----------- ----------- ----------- -----------
Units
 New Retail Units          48,590      41,745      91,337      80,924
 Used Retail Units         22,345      20,814      44,090      41,588
                       ----------- ----------- ----------- -----------
   Total Retail Units      70,935      62,559     135,427     122,512
                       =========== =========== =========== ===========

Same-Store Retail
 Revenue
  New Vehicles         $1,413,769  $1,309,234  $2,628,286  $2,531,310
  Used Vehicles           517,103     498,843   1,002,638     987,625
  Finance and
   Insurance               56,798      49,560     108,509      98,950
  Service and Parts       246,834     227,116     482,606     448,049
                       ----------- ----------- ----------- -----------
   Total Same-Store
    Retail Revenue     $2,234,504  $2,084,753  $4,222,039   4,065,934
                       =========== =========== =========== ===========

Same-Store Retail
 Revenue Growth
  New Vehicles                8.0%        3.1%        3.8%        7.1%
  Used Vehicles               3.7%      (1.2%)        1.5%        3.1%
  Finance and
   Insurance                 14.6%      (3.4%)        9.7%        1.5%
  Service and Parts           8.7%       11.7%        7.7%       14.2%

Revenue Mix
  New Vehicles               57.9%       57.6%       57.2%       57.1%
  Used Vehicles              21.3%       22.0%       21.6%       22.3%
  Finance and
   Insurance                  2.2%        2.2%        2.2%        2.2%
  Service and Parts          10.2%       10.0%       10.6%       10.2%
  Fleet                       1.0%        1.0%        1.0%        1.0%
  Wholesale                   7.4%        7.2%        7.4%        7.2%

Retail Gross Margin -
 by Product
  New Vehicles                8.7%        8.5%        8.7%        8.6%
  Used Vehicles               9.1%        8.9%        9.2%        8.9%
  Finance and
   Insurance                100.0%      100.0%      100.0%      100.0%
  Service and Parts          54.7%       54.4%       54.4%       54.3%

Gross Profit per
 Transaction
  New Vehicles             $2,835      $2,695       2,851       2,714
  Used Vehicles             2,386       2,149       2,367       2,138
  Finance and
   Insurance                  860         795         866         812



                        UNITED AUTO GROUP, INC.
                       Selected Data (Continued)

                              Second Quarter         Six Months
                            -------------------  -------------------
                              2005      2004       2005      2004
                            --------- ---------  --------- ---------
Brand Mix:
     Toyota/Lexus                 21%       24%        21%       24%
     BMW                          14%       16%        14%       16%
     Honda/Acura                  14%       11%        14%       11%
     Mercedes                     10%       11%        10%       11%
     Ford Premier Group            7%        8%         7%        8%
     Audi                          7%        4%         7%        4%
     General Motors                8%        8%         7%        8%
     Ford                          3%        3%         3%        3%
     Nissan/Infiniti               4%        4%         4%        4%
     Chrysler                      3%        4%         4%        4%
     Other                         9%        7%         9%        7%

Debt to Total Capital Ratio       36%       35%        36%       35%

Rent Expense                 $29,667   $21,736    $57,725   $43,527

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

SOURCE: United Auto Group, Inc.