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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): July 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 July 22, 1999, Group 1 Automotive, Inc., a Delaware corporation
(the "Company"), announced its financial results for the three months and six
months ended June 30, 1999. On July 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
July 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.
July 27, 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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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99.1 Press Release of Group 1 Automotive, Inc., dated as of
July 22, 1999, reporting on financial results.
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NEWS BULLETIN GROUP 1 AUTOMOTIVE INC
From: 950 Echo Lane, Suite 350 Houston TX 77024
The Financial Relations Board Inc
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<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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FOR IMMEDIATE RELEASE
THURSDAY, JULY 22, 1999
GROUP 1 POSTS DOUBLE-DIGIT GAINS IN REVENUES, EARNINGS FOR SECOND
QUARTER, FIRST SIX MONTHS OF 1999
REVENUES EXCEED $1 BILLION FOR SIX-MONTH PERIOD;
EARNINGS GROWTH OUTPACES REVENUE GROWTH
HIGHLIGHTS:
o Q2 NET INCOME JUMPS 63% ON 45% REVENUE GROWTH
o Q2 DILUTED EPS $0.42 VS. $0.31, A 35% INCREASE ON 21% MORE SHARES
o SIX-MONTH REVENUES GROW 63% TO OVER $1 BILLION; NET INCOME UP 76%
o GROSS AND OPERATING MARGINS ACCELERATE SIGNIFICANTLY FOR QUARTER AND
SIX MONTHS
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Summary Results of Operations (Unaudited)
(In millions, except per share amounts)
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<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- ----------------------------------
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Revenues $ 625.4 $ 431.5 $ 1,114.8 $ 685.5
Gross profit $ 93.7 $ 60.4 $ 169.9 $ 96.4
Income from operations $ 22.5 $ 13.8 $ 38.4 $ 21.3
Net income $ 9.2 $ 5.6 $ 15.3 $ 8.7
Diluted earnings per share $ 0.42 $ 0.31 $ 0.73 $ 0.52
</TABLE>
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HOUSTON, JULY 22, 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 second quarter and first six months of 1999. Strong revenue
growth in all revenue categories, coupled with continued improvement in
operating margin, drove the company's strong performance.
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SECOND-QUARTER RESULTS DEMONSTRATE CONTINUED SUCCESSFUL EXECUTION
For the second quarter ended June 30, 1999, revenues increased 45 percent to
$625.4 million from $431.5 million for the same period last year as revenues in
all categories increased substantially. Net income accelerated 63 percent,
reaching $9.2 million, or $0.42 per share on a diluted basis, compared with
$5.6 million, or $0.31 per share on a diluted basis, for the same period last
year. Cash flow per share (net income plus depreciation and amortization)
increased to $0.53 from $0.39 a year ago. The increases in earnings per share
and cash flow per share were achieved despite being calculated on 21 percent
more shares this quarter.
Gross margin expanded to 15.0 percent from 14.0 percent during the comparable
period last year as margins on all revenue categories improved. Income from
operations jumped 63 percent to $22.5 million from $13.8 million, resulting in
the operating margin expanding to 3.6 percent from 3.2 percent. Group 1 has
consistently achieved year-over-year quarterly operating margin improvement
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.
"Our performance this quarter with earnings growth significantly outpacing
revenue growth demonstrates the benefits being realized as we execute our
consolidation and operating strategy."
SIX-MONTH REVENUES TOP $1 BILLION
For the first six months of 1999, revenues reached $1.1 billion, a 63 percent
increase from $685.5 million for the same period last year. Revenues from new
vehicles, used vehicles, parts and service, and other dealership revenue
increased substantially. Net income jumped 76 percent to $15.3 million, or
$0.73 per share on a diluted basis, compared with $8.7 million, or $0.52 per
share on a diluted basis, for the same period last year. Diluted earnings per
share for the 1999 period were calculated on 21.0 million shares compared with
16.9 million shares last year. Diluted cash flow per share increased to $0.95
from $0.66 in the year-ago period.
Gross margin expanded to 15.2 percent from 14.1 percent during the comparable
period last year. Income from operations jumped 80 percent to $38.4 million
from $21.3 million, resulting in the operating margin expanding to 3.4 percent
from 3.1 percent.
"So far, 1999 has been a record-setting year for new vehicle sales, and we
certainly have benefited from this. More importantly, we continue to
demonstrate the successful implementation of our strategy and the realization
of synergies that lead to expanding profit margins. We are looking forward to
an outstanding year," Hollingsworth said.
RECENT ACQUISITIONS EXPECTED TO CONTRIBUTE TO 1999 SECOND HALF
Since the beginning of 1999, Group 1 has closed previously announced
acquisitions comprised of 22 franchises with revenues of over $520 million,
including Gene Messer Automotive Group, a new West Texas platform. Also
included are 11 tuck-in franchises that add to established platforms in
Atlanta, Albuquerque, N.M., Tulsa, Okla., Dallas, and Beaumont, Texas. "We are
pursuing our disciplined strategy of select acquisitions of platform and
tuck-in dealership groups that meet our criteria," Hollingsworth commented.
"Currently, we have sufficient financial resources to continue to execute our
acquisition strategy, with $94.3 million in working capital and an undrawn
acquisition line of credit of $110 million."
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VOLUNTARY RELOCK DEMONSTRATES COMMITMENT
Group 1 also announced that its directors and operators have voluntarily agreed
to an additional lock-up period for 9.8 million shares of company stock,
including 1.6 million shares for which the lock-up period has already expired.
The shares being relocked will be restricted until July 15, 2000. As a part of
the voluntary lock-up agreement, Group 1 included 883,116 secondary shares in
its $105 million universal shelf registration statement, which replaced the
previous shelf registration statement.
According to Hollingsworth, "All shareholders that were asked to consider the
additional lock-up agreed. This demonstrates their commitment to and belief in
the company we are building.
"One of our strategic objectives is to align interests of management and
shareholders," Hollingsworth continued. "A part of our acquisition strategy is
for the principals of acquired dealerships to receive a significant portion of
their consideration in unregistered stock and agree to a lock-up. This keeps
them intimately involved in our organization over the long run, motivates them
to succeed and sets the example for future acquisition candidates."
Group 1, with an annualized revenue run rate of over $2.3 billion, is a leading
operator and consolidator in the highly fragmented automotive retailing
industry. Upon completion of one announced acquisition, Group 1 will own 79
dealership franchises comprised of 26 different brands, and 15 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
TABLES TO FOLLOW...
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GROUP 1 AUTOMOTIVE, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
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<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------------ --------------------------------------
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
REVENUES:
New vehicle $362,409 $251,019 $632,527 $389,041
Used vehicle 191,560 133,625 351,339 220,745
Parts & service 51,498 34,154 95,272 55,722
Other dealership revenue, net 19,932 12,733 35,612 19,958
--------------- --------------- ---------------- -----------------
Total revenues 625,399 431,531 1,114,750 685,466
COST OF SALES:
New vehicle 332,915 231,504 580,288 358,880
Used vehicle 175,636 123,898 321,785 204,458
Parts & service 23,191 15,776 42,827 25,754
--------------- --------------- ---------------- -----------------
Total cost of sales 531,742 371,178 944,900 589,092
Gross Profit 93,657 60,353 169,850 96,374
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
68,621 45,044 126,899 72,780
DEPRECIATION AND AMORTIZATION 2,509 1,516 4,600 2,335
--------------- --------------- ---------------- -----------------
Income from operations 22,527 13,793 38,351 21,259
OTHER INCOME (EXPENSE):
Floorplan interest expense (4,338) (3,479) (8,185) (5,304)
Other interest expense, net (3,015) (627) (4,801) (938)
Other income (expense), net 69 (24) 105 (48)
--------------- --------------- ---------------- -----------------
INCOME BEFORE INCOME TAXES 15,243 9,663 25,470 14,969
PROVISION FOR INCOME TAXES 6,066 4,042 10,137 6,234
--------------- --------------- ---------------- -----------------
NET INCOME $9,177 $5,621 $15,333 $8,735
=============== =============== ================ =================
Basic earnings per share $0.44 $0.32 $0.77 $0.54
Diluted earnings per share $0.42 $0.31 $0.73 $0.52
Diluted cash flow per share $0.53 $0.39 $0.95 $0.66
Weighted average shares outstanding:
Basic 20,947,850 17,441,678 19,940,384 16,325,873
Diluted 21,960,640 18,128,366 20,980,269 16,869,256
Other Data:
Gross margin 15.0% 14.0% 15.2% 14.1%
Operating margin 3.6% 3.2% 3.4% 3.1%
Pretax income margin 2.4% 2.2% 2.3% 2.2%
Retail new vehicles sold 15,046 10,767 26,370 16,739
Retail used vehicles sold 11,651 7,991 21,672 13,345
--------------- --------------- ---------------- -----------------
Total retail sales 26,697 18,758 48,042 30,084
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GROUP 1 AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
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<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
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(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $92,504 $66,443
Inventories, net 326,679 219,176
Other assets, net 49,177 41,303
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Total current assets 468,360 326,922
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Property and equipment, net 30,044 21,960
Goodwill, net 197,624 123,587
Other assets 7,239 5,241
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Total assets $703,267 $477,710
=================== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Floorplan notes payable $280,258 $193,405
Other interest-bearing liabilities 506 2,966
Accounts payable and accrued expenses 93,316 82,300
------------------- ---------------
Total current liabilities 374,080 278,671
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Debt 99,189 42,821
Other liabilities 19,788 20,034
Total stockholders' equity 210,210 136,184
------------------- ---------------
Total liabilities and stockholders' equity $703,267 $477,710
=================== ===============
OTHER DATA:
Working capital 94,280 $48,251
Current ratio 1.25 1.17
Unused acquisition line of credit $110,000 $88,000
Non-floorplan debt to capitalization 32% 25%
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