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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 27, 1999
GROUP 1 AUTOMOTIVE, INC.
(Exact name of Registrant as specified in its charter)
Delaware 76-0506313
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
950 Echo Lane, Suite 100
Houston, Texas 77024
(Address of principal executive offices) (Zip code)
(713) 647-5700
(Registrant's telephone number including area code)
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ITEM 5. OTHER EVENTS
On October 27, 1999, Group 1 Automotive, Inc., a Delaware corporation (the
"Company"), announced its financial results for the three months and nine months
ended September 30, 1999. On October 27, 1999, the Company issued a press
release relating to such financial results. A copy of the press release is
attached hereto as Exhibit 99.1 and is incorporated herein by reference.
ITEM 7. EXHIBITS
(c) 99.1 Press Release of Group 1 Automotive, Inc., dated as of October
27, 1999, reporting on financial results.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Group 1 Automotive, Inc.
October 5, 1999 By: /s/ Scott L. Thompson
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Date Scott L. Thompson, Senior Vice
President, Chief Financial Officer and
Treasurer
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INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
99.1(c) Press Release of Group 1 Automotive, Inc., dated as of
October 27, 1999, reporting on financial results.
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NEWS BULLETIN GROUP 1 AUTOMOTIVE INC
From:
The Financial Relations Board Inc 950 Echo Lane, Suite 350 Houston, TX 77024
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AT GROUP 1: Chairman, President and CEO B. B. Hollingsworth, Jr. (713) 647-5700
Sr. VP, CFO and Treasurer Scott L. Thompson (713) 647-5700
AT FRB: General Inquiries Marilyn Windsor (312) 640-6692
Analyst Inquiries Bill Schmidle (312) 640-6753
Media Inquiries Bob Schwaller (972) 830-2295
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FOR IMMEDIATE RELEASE
WEDNESDAY, OCTOBER 27, 1999
GROUP 1 RECORDS DOUBLE-DIGIT GAINS IN REVENUES, OPERATING EARNINGS,
NET INCOME FOR 1999 THIRD QUARTER, NINE MONTHS
THIRD-QUARTER NET INCOME UP 62% ON 49% REVENUE GROWTH;
OPERATING MARGIN CONTINUES TO INCREASE
HIGHLIGHTS:
O Q3 DILUTED EPS UP 37% TO $0.48 ON 17% MORE SHARES
O NINE-MONTH DILUTED EPS $1.21, A 39% GAIN ON 22% SHARE INCREASE
O Q3, NINE-MONTH OPERATING MARGINS CONTINUE TO EXPAND
SUMMARY RESULTS OF OPERATIONS (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
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THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
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1999 1998 1999 1998
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<S> <C> <C> <C> <C>
REVENUES $ 701.8 $ 472.1 $ 1,816.5 $ 1,157.5
GROSS PROFIT $ 105.1 $ 71.0 $ 274.9 $ 167.3
INCOME FROM OPERATIONS $ 25.7 $ 16.4 $ 64.1 $ 37.7
NET INCOME $ 10.5 $ 6.5 $ 25.9 $ 15.3
DILUTED EARNINGS PER SHARE $ 0.48 $ 0.35 $ 1.21 $ 0.87
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</TABLE>
HOUSTON, OCTOBER 27, 1999--GROUP 1 AUTOMOTIVE, INC. (NYSE: GPI), a leading
operator and consolidator in the automotive retailing industry, today reported
double-digit gains in revenues, income from operations, net income and earnings
per share for the third quarter and first nine months of 1999. Significant
revenue growth in all categories, as well as continued improvement in operating
margin, drove the company's record performance.
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GROUP 1 AUTOMOTIVE
ADD-1-
ENHANCED REVENUES AND OPERATING MARGIN BOOST EARNINGS
For the third quarter ended September 30, 1999, revenues grew 49 percent to
$701.8 million from $472.1 million for the same period last year. Net income
increased 62 percent to $10.5 million from $6.5 million, while diluted earnings
per share grew 37 percent to $0.48 from $0.35 a year ago. Cash flow per share
(net income plus depreciation and amortization) increased to $0.60 from $0.45 in
the 1998 period. The increases in earnings and cash flow per share were achieved
despite being calculated on 22.1 million shares compared with 18.9 million
shares last year, a 17 percent higher number of shares outstanding.
The gross margin was steady at 15.0 percent. Income from operations rose 57
percent to $25.7 million from $16.4 million, resulting in the operating margin
expanding to 3.7 percent from 3.5 percent in the year-ago period. Group 1 has
achieved year-over-year improvements in operating margin since going public.
"I am pleased to announce another exceptionally strong quarter," said B.B.
Hollingsworth Jr., Group 1's chairman, president and chief executive officer.
"We saw solid internal growth as well as contributions from acquisitions. We are
benefiting from internal operating initiatives, the successful integration of
our acquisitions and a robust new vehicle market."
NINE-MONTH PERFORMANCE SURPASSES FULL-YEAR 1998 RESULTS
For the first nine months, revenues accelerated 57 percent to $1.8 billion from
$1.2 billion in the 1998 period. Net income increased 70 percent to $25.9
million, or $1.21 per diluted share, compared with $15.3 million, or $0.87 per
diluted share. Cash flow per share was $1.56 compared with $1.12. Per-share
amounts for the 1999 period were calculated on 21.4 million shares compared with
17.5 million shares last year.
Gross margin was 15.1 percent compared with 14.5 percent a year ago as margins
expanded in all categories. Income from operations rose 70 percent to $64.1
million from $37.7 million. The operating margin expanded to 3.5 percent from
3.3 percent in the year-ago period.
"We are very proud of our achievements in expanding operating income and
margin," Hollingsworth said. "Our operating leverage has been significant. We
have proven that select acquisitions executed under a disciplined strategy can
produce solid earnings growth."
AMARILLO OPERATIONS EXPAND
Lone Star Chrysler-Plymouth-Mitsubishi, with operations in Amarillo, Texas, has
been acquired and added to Group 1's West Texas platform. This tuck-in
acquisition is expected to generate approximately $30 million annually in
revenues.
Since the beginning of 1999, Group 1 has closed previously announced
acquisitions comprised of 23 franchises with revenues of over $550 million.
Another 24 franchise acquisitions are pending which, when completed, will boost
the company's annual revenue run rate to over $3 billion. Hollingsworth
confirmed the company would continue to seek acquisitions that meet its
standards.
CREDIT FACILITY DOUBLED
The company recently announced that its revolving credit facility was doubled to
$1 billion, including a $220 million tranche for acquisitions, and extended to
December 31, 2003. Lending syndicate members include 11 banks, as well as five
automotive captive finance companies. The acquisition portion of the facility is
not drawn.
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GROUP 1 AUTOMOTIVE
ADD-2-
"This transaction will provide the resources to support our disciplined
acquisition strategy of high-quality growth, and expands our relationships with
automobile manufacturers," Hollingsworth said.
Group 1 is a leading operator and consolidator in the highly fragmented
automotive retailing industry. Upon completion of the announced acquisitions,
Group 1 will have an annualized revenue run rate of over $3 billion, and will
own 104 dealership franchises comprised of 31 different brands, and 18 collision
service centers located in Texas, Oklahoma, Florida, New Mexico, Colorado,
Georgia, Louisiana and Massachusetts. Through its dealerships and Internet
sites, the company sells new and used cars and light trucks, provides
maintenance and repair services, sells replacement parts and arranges related
financing, vehicle service and insurance contracts.
This press release contains certain forward-looking statements within the
meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934,
which are subject to known and unknown risks, uncertainties or other factors not
under Group 1's control that may cause the actual results, performance or
achievements of Group 1 to be materially different from the results, performance
or other expectations implied by these forward-looking statements. Some of these
risks, uncertainties and other factors include those disclosed in Group 1's
filings with the Securities and Exchange Commission.
FOR ADDITIONAL INFORMATION REGARDING GROUP 1 AUTOMOTIVE FREE OF CHARGE VIA FAX,
DIAL 1-800-PRO-INFO AND USE THE COMPANY'S STOCK SYMBOL, "GPI."
GROUP 1 AUTOMOTIVE, INC. CAN BE REACHED ON THE INTERNET AT WWW.GROUP1AUTO.COM
FINANCIAL TABLES TO FOLLOW...
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GROUP 1 AUTOMOTIVE
ADD-3-
GROUP 1 AUTOMOTIVE, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
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THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
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1999 1998 1999 1998
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<S> <C> <C> <C> <C>
REVENUES:
New vehicles $ 418,244 $ 273,282 $ 1,050,771 $ 662,323
Used vehicles 203,059 142,351 554,398 363,096
Parts & service 58,188 41,542 153,460 97,264
Other dealership revenue, net 22,299 14,875 57,911 34,833
------------------ ------------------ ------------------- ------------------
Total revenues 701,790 472,050 1,816,540 1,157,516
COST OF SALES:
New vehicles 382,941 251,038 963,229 609,918
Used vehicles 187,070 130,722 508,855 335,180
Parts & service 26,684 19,327 69,511 45,081
------------------ ------------------ ------------------- ------------------
Total cost of sales 596,695 401,087 1,541,595 990,179
Gross Profit 105,095 70,963 274,945 167,337
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 76,558 52,502 203,457 125,282
DEPRECIATION EXPENSE 1,220 1,127 3,397 2,650
AMORTIZATION EXPENSE 1,605 913 4,028 1,725
------------------ ------------------ ------------------- ------------------
Income from operations 25,712 16,421 64,063 37,680
OTHER INCOME (EXPENSE):
Floorplan interest expense (5,438) (3,690) (13,623) (8,994)
Other interest expense, net (2,904) (1,767) (7,705) (2,705)
Other income (expense), net 104 40 209 (8)
------------------ ------------------ ------------------- ------------------
INCOME BEFORE INCOME TAXES 17,474 11,004 42,944 25,973
PROVISION FOR INCOME TAXES 6,955 4,489 17,092 10,723
------------------ ------------------ ------------------- ------------------
NET INCOME $ 10,519 $ 6,515 $ 25,852 $ 15,250
================== ================== =================== ==================
Basic earnings per share $ 0.49 $ 0.36 $ 1.27 $ 0.90
Diluted earnings per share $ 0.48 $ 0.35 $ 1.21 $ 0.87
Diluted cash flow per share $ 0.60 $ 0.45 $ 1.56 $ 1.12
Weighted average shares outstanding:
Basic 21,253,799 18,199,646 20,383,000 16,957,327
Diluted 22,106,027 18,855,004 21,359,645 17,538,446
Other Data:
Gross margin 15.0% 15.0% 15.1% 14.5%
Operating margin 3.7% 3.5% 3.5% 3.3%
Pretax income margin 2.5% 2.3% 2.4% 2.2%
Retail new vehicles sold 17,259 11,901 43,629 28,640
Retail used vehicles sold 12,454 9,086 34,126 22,431
------------------ ------------------ ------------------- ------------------
Total retail sales 29,713 20,987 77,755 51,071
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GROUP 1 AUTOMOTIVE
ADD-4-
GROUP 1 AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
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<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
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(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $103,947 $66,443
Inventories, net 289,314 219,176
Other assets, net 48,843 41,303
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Total current assets 442,104 326,922
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Property and equipment, net 36,492 21,960
Goodwill, net 200,468 123,587
Other assets 10,201 5,241
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Total assets $689,265 $477,710
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Floorplan notes payable $246,241 $193,405
Other interest-bearing liabilities 1,101 2,966
Accounts payable and accrued expenses 100,228 82,300
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Total current liabilities 347,570 278,671
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Debt 102,032 42,821
Other liabilities 19,368 20,034
Total stockholders' equity 220,295 136,184
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Total liabilities and stockholders' equity $689,265 $477,710
=============== ==============
OTHER DATA:
Working capital $94,534 $48,251
Current ratio 1.27 1.17
Long-term debt to capitalization 32% 25%
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