UnitedAuto Reports Third Quarter Results; Revenues Increase 11% ......
United Auto Group, Inc. (NYSE: UAG), a worldwideautomotive retailer, today reported a 10.8% increase in third quarterrevenues to $2.8 billion. The revenue increase is driven by a 10.3%rise in retail vehicle revenues and a 14.3% growth in service andparts revenues, and includes a 7.0% increase in same-store retailsales. Gross margin in the third quarter increased 50 basis points to14.7% due to margin increases in each of the Company's product lines,coupled with a 43-basis-point increase in the relative contribution ofhigher margin service and parts and finance and insurance revenues tototal revenues.
Third quarter net income was $32.8 million, or $0.70 per share.This represents a 19.0% increase compared to third quarter 2004adjusted net income of $27.5 million, or $0.60 per share, whichexcludes $4.9 million ($0.10 per share) of net income resulting fromthe sale of an investment, a reduction of the Company's estimatedannual effective tax rate, a refund of UK consumption taxes, and costsassociated with the relocation of certain franchises in the UK.
For the nine months ended September 30, 2005, revenues increased14.6% to $8.0 billion. Net income for the nine months was $88.9million, or $1.89 per share. This represents a 16.0% increase comparedto prior year adjusted net income of $76.6 million, or $1.69 pershare, which excludes the $4.9 million of items referenced above andan additional $4.1 million from the sale of an investment in thesecond quarter of 2004.
"We are pleased with the performance of our business in the thirdquarter," said UAG Chairman Roger Penske. "During the quarter, we werechallenged by higher interest rates, rising gasoline prices, productavailability, and a shift in consumer buying patterns. Despite theseobstacles, we achieved our 26th consecutive quarter of record revenue,including an 8.5% increase in same-store service and parts revenue, aswell as improved gross margins in all areas of our operations."
Penske continued, "Our service and parts operation continues toimprove, including increases in volume and margins, as a result ofincreases in units in operation and the continuing maturity of ourcapital investments. In fact, service and parts revenues increased to10.3% of our total revenue, an improvement of 31 basis points over theprior year. The performance of our service and parts operations,coupled with strong margins on both new and used vehicles, contributedto an increase in our operating margin to 2.8%."
After considering the steady increase in interest rates, volatileenergy prices and the challenging selling environment in the fourthquarter, the Company currently estimates earnings in the range of$0.51 to $0.56 per share for the fourth quarter and $2.40 to $2.45 pershare for the full year 2005.
UnitedAuto will host a conference call discussing financialresults relating to third quarter 2005 on Tuesday, October 25, 2005 at12:30 p.m. ET. To listen to the conference call, participants mustdial (800) 230-1059 (International, please dial (612) 234-9959). Thecall will be simultaneously broadcast live over the Internet throughthe UnitedAuto website at www.unitedauto.com.
United Auto Group, Inc., headquartered in Bloomfield Hills,Michigan, operates 269 retail automotive franchises, representing 40different brands, and 29 collision repair centers. UnitedAuto, whichsells new and previously owned vehicles, finance and insuranceproducts and replacement parts, and offers maintenance and repairservices on all brands it represents, has 167 franchises in 19 statesand Puerto Rico and 102 franchises located internationally, primarilyin the United Kingdom. UnitedAuto is a member of the Fortune 500 andRussell 2000 and has approximately 14,000 employees.
Statements in this press release involve forward-lookingstatements, including forward-looking statements regardingUnitedAuto's future sales and earnings growth potential. Actualresults may vary materially because of risks and uncertainties,including external factors such as interest rate fluctuations, changesin consumer spending and other factors over which management has nocontrol. These forward-looking statements should be evaluated togetherwith additional information about UnitedAuto's business, markets,conditions and other uncertainties which could affect UnitedAuto'sfuture performance, which is contained in UnitedAuto's Form 10-K forthe year ended December 31, 2004, and its other filings with theSecurities and Exchange Commission, and which is incorporated intothis press release by reference. This press release speaks only as ofits date and UnitedAuto disclaims any duty to update the informationherein.
This release contains certain non-GAAP financial measures asdefined under SEC rules, such as adjusted net income, which excludecertain items disclosed in the release. The Company has reconciledthese measures to the most directly comparable GAAP measures in therelease. The Company believes that these non-GAAP financial measuresimprove the transparency of the Company's disclosure and theperiod-to-period comparability of the Company's results fromoperations.
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