United Auto Group, Inc.
NYSE : UAG

July 19, 2005 07:31 ET

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.--(CCNMatthews - Jul 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



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