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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): April 22, 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 350
Houston, Texas 77024
(Address of principal executive offices) (Zip code)
(713) 467-6268
(Registrant's telephone number including area code)
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ITEM 5. OTHER EVENTS
On April 22, 1999, Group 1 Automotive, Inc., a Delaware corporation
(the "Company"), announced its financial results for the three months ended
March 31, 1999. On April 22, 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 April
22, 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.
April 28, 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 EXHIBIT
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
99.1 Press Release
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NEWS BULLETIN GROUP 1 AUTOMOTIVE INC
From:
The Financial Relations Board Inc 950 Echo Lane, Suite 350 Houston, TX 77024
<TABLE>
<S> <C> <C> <C>
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AT GROUP 1: Chairman, President and CEO B. B. Hollingsworth, Jr. (713) 467-6268
Sr. VP, CFO and Treasurer Scott L. Thompson (713) 467-6268
AT FRB: General Inquiries Marilyn Windsor (312) 640-6692
Analyst Inquiries Bill Schmidle (312) 640-6753
Media Inquiries Bob Schwaller (972) 450-6562
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</TABLE>
FOR IMMEDIATE RELEASE
THURSDAY, APRIL 22, 1999
GROUP 1 POSTS 93% REVENUE GAIN, NET INCOME DOUBLES
FOR FIRST QUARTER 1999
HIGHLIGHTS:
o DILUTED EPS $0.31 VS. $0.20, A 55% INCREASE
o CASH FLOW PER SHARE $0.41 VS. $0.25, A 64% INCREASE
o GROSS AND OPERATING MARGINS ACCELERATE SIGNIFICANTLY
o PREVIOUSLY ANNOUNCED ALBUQUERQUE, ATLANTA, BEAUMONT AND TULSA
ACQUISITIONS CLOSED
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Summary Results of Operations (Unaudited)
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
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1999 1998
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<S> <C> <C>
Revenues $ 489.4 $ 253.9
Gross Profit $ 76.2 $ 36.0
Income from Operations $ 15.8 $ 7.5
Net Income $ 6.2 $ 3.1
Diluted Earnings per Share $ 0.31 $ 0.20
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</TABLE>
HOUSTON, APRIL 22, 1999--GROUP 1 AUTOMOTIVE, INC. (NYSE: GPI), a leading
operator and consolidator in the automotive retailing industry, today reported
strong gains in revenues, net income and earnings per share for the first
quarter of 1999 compared with the same period last year. Significant organic
revenue growth and expanded gross and operating margins coupled with
contributions from successfully integrated acquisitions, drove the company's
strong financial performance.
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GROUP 1 AUTOMOTIVE, INC.
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ENHANCED REVENUES, EXPANDED MARGINS BOOST EARNINGS
Revenues accelerated 93 percent to $489.4 million from $253.9 million for the
same period last year. Net income doubled to $6.2 million from $3.1 million
while diluted earnings per share grew to $0.31 from $0.20 a year ago. Cash flow
per share (net income plus depreciation and amortization) increased to $0.41
from $0.25 a year ago.
Gross margin expanded to 15.6 percent from 14.2 percent during the year-ago
period. Margins on all revenue categories improved, and other dealership
revenues and parts and service revenues became a greater percentage of total
revenues. Income from operations more than doubled to $15.8 million from $7.5
million, resulting in the operating margin expanding to 3.2 percent from 2.9
percent. Group 1 has consistently achieved year-over-year quarterly operating
margin improvement since going public.
"I am pleased to announce that the momentum we generated in 1998 has continued
into 1999," said B.B. Hollingsworth Jr., Group 1's chairman, president and
chief executive officer. "Nationally, new vehicle sales were outstanding in the
first quarter with new unit sales up over 10 percent, and we certainly
benefited from this performance. More impressively, we were able to increase
our used vehicle sales and used vehicle gross margin in a quarter characterized
by strong new vehicle sales and advertising."
Hollingsworth noted that gross margins were up significantly in all revenue
categories. "We recorded our highest new vehicle and used vehicle margins since
going public," he said. Other dealership revenues continued to grow more
rapidly than vehicle unit sales, evidencing the success of the company's
finance, service and insurance contract programs, an area Group 1 has
emphasized through new products and training programs. "One of the key elements
of our long-term growth strategy is to increase revenues from our high-margin
products," Hollingsworth added. "We will continue to provide our co-workers
with the skills and products necessary to realize this goal."
ACQUISITIONS ON TARGET
Further expansion of revenues and earnings, as well as geographic and brand
diversity, is targeted through acquisitions. Since year end, Group 1 has closed
its previously announced acquisitions of Tidwell Ford in Atlanta, Sunshine
Pontiac, Buick and GMC in Albuquerque, N.M., and South Pointe Chevrolet in
Tulsa, Okla. Additionally, the company completed the acquisitions of Cadillac
and Pontiac franchises and the exchange of Lincoln-Mercury franchises for a BMW
franchise in Beaumont, Texas.
As previously announced, Group 1 has agreed to acquire an additional 20
dealership franchises with aggregate revenues of over $545 million, including
two new platforms--Gene Messer Automotive Group, which will become Group 1's
West Texas platform, and Sandy Sansing Automotive Group, which will become the
company's north Florida platform. "The Messer Group is on track to close during
the second quarter and the remainder of the acquisitions in the third quarter,"
Hollingsworth said.
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GROUP 1 AUTOMOTIVE, INC.
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The acquisitions are subject to customary closing conditions, including
approval of various manufacturers, government agencies and completion of due
diligence. Once all acquisitions are completed, Group 1's annualized revenue
run rate will be over $2.4 billion, representing more than 100,000 retail car
and truck sales.
ADDITIONAL RESOURCES FOR ACQUISITION STRATEGY
On March 5, the company announced that it sold 2 million shares of common stock
and $100 million in 10-year senior subordinated notes. Net proceeds to the
company totaled $140 million. "We were pleased with the successful offerings,"
Hollingsworth said. "The proceeds give us the resources necessary to pursue our
strategy of making select acquisitions in the automotive retailing industry."
Group 1 has received commitments to increase its revolving credit facility to
$500 million, lower the interest rate on the floorplan portion of the facility,
reduce certain administration costs and favorably modify certain loan
covenants. The company also announced that two automotive captive finance
subsidiaries, Ford Motor Credit Company and Toyota Motor Credit Corporation,
will join the company's bank syndicate, bringing the total syndicate membership
to 12. Currently, the acquisition portion of this facility is undrawn.
Group 1 is a leading operator and consolidator in the highly fragmented
automotive retailing industry. Upon completion of all announced acquisitions,
Group 1 will own 83 dealership franchises comprised of 24 different brands, and
17 collision service centers located in Texas, Oklahoma, Florida, New Mexico,
Colorado, and Georgia. Through its dealerships 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, INC.
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GROUP 1 AUTOMOTIVE, INC.
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------
1999 1998
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(unaudited)
<S> <C> <C>
REVENUES:
New vehicle $ 270,118 $ 138,022
Used vehicle 159,779 87,119
Parts & service 43,774 21,568
Other dealership revenues, net 15,680 7,225
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Total revenues 489,351 253,934
COST OF SALES:
New vehicle 247,373 127,376
Used vehicle 146,148 80,560
Parts & service 19,636 9,978
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Total cost of sales 413,157 217,914
Gross profit 76,194 36,020
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 58,278 27,736
DEPRECIATION AND AMORTIZATION 2,091 819
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Income from operations 15,825 7,465
OTHER INCOME (EXPENSE):
Floorplan interest expense (3,847) (1,824)
Other interest expense, net (1,786) (312)
Other income (expense), net 36 (23)
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Income before income taxes 10,228 5,306
PROVISION FOR INCOME TAXES 4,071 2,192
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NET INCOME $ 6,157 $ 3,114
============ ============
Basic earnings per share $ 0.33 $ 0.21
Diluted earnings per share $ 0.31 $ 0.20
Diluted cash flow per share $ 0.41 $ 0.25
Weighted average shares outstanding:
Basic 18,921,723 15,197,670
Diluted 19,989,005 15,596,155
Other Data:
Gross margin 15.6% 14.2%
Operating margin 3.2% 2.9%
Pretax income margin 2.1% 2.1%
Retail new vehicles sold 11,324 5,972
Retail used vehicles sold 10,021 5,354
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Total retail sales 21,345 11,326
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GROUP 1 AUTOMOTIVE, INC.
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GROUP 1 AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
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(unaudited) (audited)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 72,029 $ 66,443
Inventories, net 262,940 219,176
Other assets, net 40,525 41,303
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Total current assets 375,494 326,922
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Property, plant and equipment, net 26,313 21,960
Goodwill, net 134,774 123,587
Other assets 8,215 5,241
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Total assets $ 544,796 $ 477,710
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Floorplan notes payable $ 158,761 $ 193,405
Other interest-bearing liabilities 424 2,966
Accounts payable and accrued expenses 79,223 82,300
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Total current liabilities 238,408 278,671
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Debt 98,849 42,821
Other liabilities 19,116 20,034
Total stockholders' equity 188,423 136,184
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Total liabilities and stockholders' equity $ 544,796 $ 477,710
============ ============
OTHER DATA:
Working capital $ 137,086 $ 48,251
Current ratio 1.58 1.17
Unused acquisition line of credit $ 110,000 $ 88,000
Non-floorplan debt to capitalization 35% 25%
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