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Press release from PR Newswire

Group 1 Automotive Reports Record Full-Year 2012 Financial Results

Tuesday, February 19, 2013

Group 1 Automotive Reports Record Full-Year 2012 Financial Results07:07 EST Tuesday, February 19, 2013HOUSTON, Feb. 19, 2013 /PRNewswire/ -- Group 1 Automotive, Inc. (NYSE: GPI), a Fortune 500 automotive retailer, today reported adjusted 2012 fourth-quarter net income of $24.0 million and diluted earnings per common share of $0.99 for the period ended Dec. 31, 2012. Full-year 2012 adjusted net income increased 25.8 percent, to a record $108.2 million, and adjusted diluted earnings per common share were an all-time high of $4.53.Fourth-Quarter 2012 Results (on a year-over-year basis unless otherwise noted)Total gross profit grew 14.0 percent on 19.3 percent higher revenues of $1.9 billion. New vehicle revenues increased 22.3 percent on 20.8 percent more unit sales. New vehicle gross profit increased 12.4 percent on an average vehicle selling price increase of 1.2 percent, to $34,872. Retail used vehicle gross profit increased 13.9 percent on 16.6 percent higher revenues, as the average selling price increased 2.7 percent, to $20,977, and the company retailed 13.5 percent more units. Parts and service gross profit increased 8.6 percent on 8.3 percent higher revenues. Finance and insurance gross profit per retail unit increased $87, to an all-time record $1,270, as penetration rates improved in both finance and vehicle service contracts. Selling, general and administrative (SG&A) expenses (adjusted) as a percent of revenues improved 40 basis points, to 11.1 percent. SG&A expenses (adjusted) as a percent of gross profit increased 60 basis points, to 76.7 percent.Full-Year 2012 Results (on a year-over-year basis unless otherwise noted)Total gross profit grew 16.3 percent on 23.0 percent higher revenues of $7.5 billion, representing increases in all operating segments and new all-time records. New vehicle gross profit grew 17.6 percent on 26.1 percent higher revenues, as the company retailed 128,550 new vehicles in 2012. Retail used vehicle gross profit was 17.3 percent higher on a 24.0 percent revenue increase. Parts and service revenues grew 8.1 percent. Finance and insurance revenues increased 32.8 percent on 24.0 percent more retail unit sales; gross profit per unit was a record-setting $1,215. SG&A expenses (adjusted) as a percent of gross profit improved 100 basis points on a comparable basis, to 75.4 percent. Operating margin (adjusted) was 3.2 percent."Overall, 2012 was a great year for Group 1 Automotive with total revenue growth of 23 percent and all-time record net income and earnings per diluted share," said Earl J. Hesterberg, Group 1's president and chief executive officer. "Despite continuing the strong growth pace in the fourth quarter with 19 percent revenue growth, we missed some opportunities to maximize profits via complete leveraging of our cost structure. We began taking actions in this regard on Jan. 1, and I am confident that we can return to the type of cost leverage we generated in the first three quarters of the year. I believe 2013 will be another great year for the industry as a whole and Group 1 Automotive in particular."Corporate DevelopmentDuring the fourth quarter, Group 1 purchased a Hyundai dealership in Oklahoma, a Ford dealership in Georgia and a Kia dealership in Kansas that are estimated to generate $180.0 million in annual revenues. The company also disposed of two Nissan dealerships and a Mazda dealership in Massachusetts, an Audi dealership in the United Kingdom and its Maybach franchise in California. In total the fourth quarter dispositions generated trailing-12-month revenues of $110.3 million.During 2012, Group 1 acquired a total of 16 franchises that are expected to generate $715.0 million in annual revenues and disposed of six franchises that generated $128.0 million of annual revenues.In January 2013, Group 1 disposed of a Nissan dealership in California that generated $35.0 million in annual revenues during the last 12 months.Fourth-Quarter Earnings Conference CallGroup 1's senior management will host a conference call today at 10 a.m. ET to discuss the fourth-quarter financial results and the company's outlook and strategy.The conference call will be simulcast live on the Internet at www.group1auto.com, then click on 'Investor Relations' and then 'Events' or through this link: http://www.group1corp.com/news/events.aspx. A replay will be available for 30 days.The conference call will also be available live by dialing in 10 minutes prior to the start of the call at:Domestic: 1.877.317.6789International: 1.412.317.6789Conference ID: 10023527A telephonic replay will be available following the call through Feb. 27 at 9 a.m. ET by dialing:Domestic: 1.877.344.7529International: 1.412.317.0088Conference ID: 10023527About Group 1 Automotive, Inc.Group 1 owns and operates 120 automotive dealerships, 156 franchises, and 31 collision centers in the United States and the United Kingdom that offer 31 brands of automobiles. Through its dealerships, the company sells new and used cars and light trucks; arranges related vehicle financing, service and insurance contracts; provides automotive maintenance and repair services; and sells vehicle parts.Group 1 Automotive can be reached on the Internet at www.group1auto.com.This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which are statements related to future, not past, events and are based on our current expectations and assumptions regarding our business, the economy and other future conditions. In this context, the forward-looking statements often include statements regarding our goals, plans, projections and guidance regarding our financial position, results of operations, market position, pending and potential future acquisitions and business strategy, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "should," "foresee," "may" or "will" and similar expressions. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. Any such forward-looking statements are not assurances of future performance and involve risks and uncertainties that may cause actual results to differ materially from those set forth in the statements. These risks and uncertainties include, among other things, (a) general economic and business conditions, (b) the level of manufacturer incentives, (c) the future regulatory environment, (d) our ability to obtain an inventory of desirable new and used vehicles, (e) our relationship with our automobile manufacturers and the willingness of manufacturers to approve future acquisitions, (f) our cost of financing and the availability of credit for consumers, (g) our ability to complete acquisitions and dispositions and the risks associated therewith, (h) foreign exchange controls and currency fluctuations, and (i) our ability to retain key personnel. For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with the SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.Investor Contacts:Kim Paper CanningManager, Investor RelationsGroup 1 Automotive, Inc.713-647-5741 | kpaper@group1auto.comMedia Contacts:Pete DeLongchampsV.P. Financial Services and Manufacturer RelationsGroup 1 Automotive, Inc.713-647-5770 | pdelongchamps@group1auto.comorClint WoodsPierpont Communications, Inc.713-627-2223 | cwoods@piercom.com  Group 1 Automotive, Inc.Consolidated Statements of Operations(Unaudited)(In thousands, except per share amounts)Three Months Ended December 31,20122011% ChangeREVENUES:New vehicle retail sales$  1,156,507$     945,39222.3Used vehicle retail sales423,315362,91116.6Used vehicle wholesale sales69,72459,43417.3Parts and service221,666204,7118.3Finance and insurance67,74553,48126.7Total revenues1,938,9571,625,92919.3COST OF SALES:New vehicle retail sales1,092,280888,25223.0Used vehicle retail sales390,284333,90216.9Used vehicle wholesale sales69,66459,31217.5Parts and service106,47698,6028.0Total cost of sales1,658,7041,380,06820.2GROSS PROFIT280,253245,86114.0SELLING, GENERAL ANDADMINISTRATIVE EXPENSES218,925188,10916.4DEPRECIATION ANDAMORTIZATION EXPENSE8,4607,18217.8ASSET IMPAIRMENTS6,988797776.8OPERATING INCOME45,88049,773(7.8)OTHER EXPENSE:Floorplan interest expense(8,372)(7,442)12.5Other interest expense, net(9,616)(8,911)7.9INCOME BEFORE INCOME TAXES27,89233,420(16.5)PROVISION FOR INCOME TAXES(10,760)(12,565)(14.4)NET INCOME$       17,132$       20,855(17.9)DILUTED INCOME PER SHARE$           0.70$           0.90(22.2)Weighted average dilutive common shares outstanding23,24422,0405.5Weighted average participating securities1,0911,276(14.5)Total weighted average shares outstanding24,33523,3164.4Twelve Months Ended December 31,20122011% ChangeREVENUES:New vehicle retail sales$  4,291,098$  3,402,64726.1Used vehicle retail sales1,756,9181,416,52024.0Used vehicle wholesale sales288,139251,04314.8Parts and service880,070813,8198.1Finance and insurance259,875195,73632.8Total revenues7,476,1006,079,76523.0COST OF SALES:New vehicle retail sales4,043,6593,192,30926.7Used vehicle retail sales1,610,9121,291,99624.7Used vehicle wholesale sales285,695246,96315.7Parts and service418,582387,8977.9Total cost of sales6,358,8485,119,16524.2GROSS PROFIT1,117,252960,60016.3SELLING, GENERAL ANDADMINISTRATIVE EXPENSES848,446735,22915.4DEPRECIATION ANDAMORTIZATION EXPENSE31,53427,06316.5ASSET IMPAIRMENTS7,2764,80551.4OPERATING INCOME229,996193,50318.9OTHER EXPENSE:Floorplan interest expense(31,796)(27,687)14.8Other interest expense, net(37,465)(33,722)11.1INCOME BEFORE INCOME TAXES160,735132,09421.7PROVISION FOR INCOME TAXES(60,526)(49,700)21.8NET INCOME$     100,209$       82,39421.6DILUTED INCOME PER SHARE$           4.19$           3.4720.7Weighted average dilutive common shares outstanding22,68822,4091.2Weighted average participating securities1,2151,377(11.8)Total weighted average shares outstanding23,90323,7860.5  Group 1 Automotive, Inc.Consolidated Balance Sheets(Dollars in thousands)December 31,December 31,20122011% ChangeASSETS:CURRENT ASSETS:Cash and cash equivalents$              4,650$            14,895(68.8)Contracts in transit and vehicle receivables, net204,396167,50722.0Accounts and notes receivable, net111,22892,77519.9Inventories, net1,194,288867,47037.7Deferred income taxes19,75016,01223.3Prepaid expenses and other current assets31,86916,92588.3Total current assets1,566,1811,175,58433.2PROPERTY AND EQUIPMENT, net667,768585,63314.0GOODWILL AND INTANGIBLE FRANCHISE RIGHTS778,442702,14510.9OTHER ASSETS10,62412,981(18.2)Total assets$       3,023,015$       2,476,34322.1LIABILITIES AND STOCKHOLDERS' EQUITY:CURRENT LIABILITIES:Floorplan notes payable - credit facility$          968,959$          718,94534.8Offset account related to floorplan notes payable - credit facility(112,261)(109,207)2.8Floorplan notes payable - manufacturer affiliates211,965155,98035.9Current maturities of long-term debt and short-term financing31,35814,663113.9Current liabilities from interest rate risk management activities-7,273(100.0)Accounts payable167,439148,04813.1Accrued expenses128,118109,24517.3Total current liabilities1,395,5781,044,94733.62.25% CONVERTIBLE SENIOR NOTES (aggregate         principal of $182,753 at December 31, 2012 and         December 31, 2011) 152,363 144,985 5.13.00% CONVERTIBLE SENIOR NOTES (aggregate         principal of $115,000 at December 31, 2012 and         December 31, 2011) 80,706 77,401 4.3MORTGAGE FACILITY, net of current maturities53,64338,87338.0OTHER REAL ESTATE RELATED AND LONG-TERM DEBT,net of current maturities232,285184,23726.1CAPITAL LEASE OBLIGATIONS RELATED TO REAL ESTATE,net of current maturities36,01937,105(2.9)DEFERRED INCOME TAXES94,13078,45920.0LIABILITIES FROM INTEREST RATE RISK MANAGEMENT ACTIVITIES43,08926,76661.0OTHER LIABILITIES42,41336,47016.3COMMITMENTS AND CONTINGENCIESTEMPORARY EQUITY - REDEEMABLE EQUITY        PORTION OF THE 3.00% CONVERTIBLE SENIOR        NOTES 32,505 - 100.0STOCKHOLDERS' EQUITY:Common stock258260(0.8)Additional paid-in capital332,836363,375(8.4)Retained earnings677,864591,03714.7Accumulated other comprehensive loss(33,057)(29,236)13.1Treasury stock(117,617)(118,336)(0.6)Total stockholders' equity860,284807,1006.6Total liabilities and stockholders' equity$       3,023,015$       2,476,34322.1KEY DEBT COVENANT METRICS:Senior secured adjusted leverage ratio (must be less than 3.75)2.352.46Total adjusted leverage ratio (must be less than 5.50)3.383.65Fixed charge coverage ratio (must be greater than 1.35)2.001.94  Group 1 Automotive, Inc.Consolidated Statements of Adjusted Cash Flows from Operating Activities(Unaudited)(In thousands)Three Months Ended December 31,20122011% ChangeNet income$    17,132$    20,855(17.9)Adjustments to reconcile net income to net cash providedby (used in) operating activities:Asset impairments6,988797776.8Depreciation and amortization8,4607,18217.8Deferred income taxes2,5278,544(70.4)(Gain) loss on disposition of assets and franchise(2,810)6(46,933.3)Stock-based compensation2,9882,58615.5Amortization of debt discount and issue costs3,3313,1196.8Other49529269.5Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:Accounts payable and accrued expenses10,58037,305(71.6)Accounts and notes receivable(13,457)(21,783)(38.2)Inventories(85,087)(119,114)(28.6)Contracts-in-transit and vehicle receivables(54,226)(67,346)(19.5)Prepaid expenses and other assets(4,127)(7,792)(47.0)Floorplan notes payable - credit facility (1)69,749143,307(51.3)Floorplan notes payable - manufacturer affiliates (2)28,19926,5956.0Deferred revenues(52)(182)(71.4)Adjusted net cash provided by (used in) operating activities$     (9,310)$    34,371(127.1)(1) Excludes net acquisition/(disposition) related activity of $(11,638) and $21,384 for the three months endedDecember 31, 2012 and 2011, respectively.(2) Excludes net acquisition/(disposition) related activity of $11,028 and $7,134 for the three months endedDecember 31, 2012 and 2011, respectively.Twelve Months Ended December 31,20122011% ChangeNet income$  100,209$    82,39421.6Adjustments to reconcile net income to net cash provided by operating activities:Asset impairments7,2764,80551.4Depreciation and amortization31,53427,06316.5Deferred income taxes13,28224,824(46.5)Gain on disposition of assets and franchise(4,941)(961)414.2Stock-based compensation11,93110,9199.3Amortization of debt discount and issue costs12,99011,9908.3Other1,090277293.5Changes in operating assets and liabilities, net of effects of  acquisitions and dispositions:Accounts payable and accrued expenses29,87477,027(61.2)Accounts and notes receivable(6,777)(17,875)(62.1)Inventories(278,232)(7,410)3,654.8Contracts-in-transit and vehicle receivables(29,091)(53,821)(45.9)Prepaid expenses and other assets2,448(11,246)121.8Floorplan notes payable - credit facility(1)245,544(13,350)1,939.3Floorplan notes payable - manufacturer affiliates(2)22,22019,04516.7Deferred revenues(163)(1,427)(88.6)Adjusted net cash provided by operating activities$  159,194$  152,2544.6(1) Excludes net acquisition/(disposition) related activity of $4,471 and $41,860 for the twelve months endedDecember 31, 2012 and 2011, respectively.(2) Excludes net acquisition/(disposition) related activity of $11,028 and $33,712 for the twelve months endedDecember 31, 2012 and 2011, respectively.  Group 1 Automotive, Inc.Additional Information - Consolidated(Unaudited)Three Months EndedTwelve Months EndedDecember 31,December 31,2012 (%)2011 (%)2012 (%)2011 (%)NEW VEHICLE UNIT SALES GEOGRAPHIC MIX: RegionGeographic MarketEastMassachusetts6.610.09.111.3New Jersey5.45.35.15.5New York4.24.23.33.8Georgia4.03.33.63.4New Hampshire2.62.82.83.0Louisiana2.52.52.52.8South Carolina2.01.71.81.5Florida1.90.81.40.7Mississippi1.82.02.02.0Alabama1.01.31.01.2Maryland0.80.80.70.832.834.733.336.0WestTexas36.838.636.736.0California14.913.714.613.9Oklahoma7.58.07.88.2Kansas1.50.91.40.960.761.260.559.0InternationalUnited Kingdom6.54.16.25.0100.0100.0100.0100.0NEW VEHICLE UNIT SALES BRAND MIX:Toyota/Scion/Lexus28.629.830.330.4BMW/MINI13.012.711.313.1Honda/Acura11.09.411.110.7Nissan/Infiniti10.012.711.413.7Ford9.59.99.38.9Volkswagen/Audi/Porsche6.83.46.62.7Daimler6.76.85.15.9GM5.26.45.65.6Chrysler4.34.84.44.5Hyundai/Kia3.52.03.12.2Other1.42.11.82.3100.0100.0100.0100.0NEW VEHICLE UNIT SALES OTHER MIX:Import49.850.453.753.2Luxury31.929.427.828.1Domestic18.320.218.518.7100.0100.0100.0100.0Car56.551.456.854.1Truck43.548.643.245.9100.0100.0100.0100.0  Group 1 Automotive, Inc.Additional Information - Consolidated(Unaudited)(Dollars in thousands, except per unit amounts)Three Months Ended December 31,20122011% ChangeREVENUES:New vehicle retail sales$     1,156,507$        945,39222.3Used vehicle retail sales423,315362,91116.6Used vehicle wholesale sales69,72459,43417.3Total used493,039422,34516.7Parts and service221,666204,7118.3Finance and insurance67,74553,48126.7Total $     1,938,957$     1,625,92919.3GROSS MARGIN %:New vehicle retail sales5.66.0Used vehicle retail sales7.88.0Used vehicle wholesale sales0.10.2Total used6.76.9Parts and service52.051.8Finance and insurance100.0100.0Total14.515.1GROSS PROFIT:New vehicle retail sales$          64,227$          57,14012.4Used vehicle retail sales33,03129,00913.9Used vehicle wholesale sales60122(50.8)Total used33,09129,13113.6Parts and service115,190106,1098.6Finance and insurance67,74553,48126.7Total $        280,253$        245,86114.0UNITS SOLD:Retail new vehicles sold33,16427,44420.8Retail used vehicles sold20,18017,77513.5Wholesale used vehicles sold10,4698,75119.6Total used30,64926,52615.5AVERAGE RETAIL SALES PRICE:New vehicle retail$          34,872$          34,4481.2Used vehicle retail$          20,977$          20,4172.7GROSS PROFIT PER UNIT SOLD:New vehicle retail sales$            1,937$            2,082(7.0)Used vehicle retail sales1,6371,6320.3Used vehicle wholesale sales614(57.1)Total used1,0801,098(1.6)Finance and insurance (per retail unit)$            1,270$            1,1837.4OTHER: (1)SG&A expenses$        214,895$        187,10914.9SG&A as % revenues11.111.5SG&A as % gross profit76.776.1Operating margin %2.93.2Pretax margin %2.02.2FLOORPLAN EXPENSE:Floorplan interest$          (8,372)$           (7,442)12.5Floorplan assistance8,6397,30818.2Net floorplan income (expense)$               267$              (134)299.3Twelve Months Ended December 31,20122011% ChangeREVENUES:New vehicle retail sales$     4,291,098$     3,402,64726.1Used vehicle retail sales1,756,9181,416,52024.0Used vehicle wholesale sales288,139251,04314.8Total used2,045,0571,667,56322.6Parts and service880,070813,8198.1Finance and insurance259,875195,73632.8Total $     7,476,100$     6,079,76523.0GROSS MARGIN %:New vehicle retail sales5.86.2Used vehicle retail sales8.38.8Used vehicle wholesale sales0.81.6Total used7.37.7Parts and service52.452.3Finance and insurance100.0100.0Total14.915.8GROSS PROFIT:New vehicle retail sales$        247,439$        210,33817.6Used vehicle retail sales146,006124,52417.3Used vehicle wholesale sales2,4444,080(40.1)Total used148,450128,60415.4Parts and service461,488425,9228.4Finance and insurance259,875195,73632.8Total $     1,117,252$        960,60016.3UNITS SOLD:Retail new vehicles sold128,550102,02226.0Retail used vehicles sold85,36670,47521.1Wholesale used vehicles sold43,75635,99721.6Total used129,122106,47221.3AVERAGE RETAIL SALES PRICE:New vehicle retail$          33,381$          33,3520.1Used vehicle retail$          20,581$          20,1002.4GROSS PROFIT PER UNIT SOLD:New vehicle retail sales$            1,925$            2,062(6.6)Used vehicle retail sales1,7101,767(3.2)Used vehicle wholesale sales56113(50.4)Total used1,1501,208(4.8)Finance and insurance (per retail unit)$            1,215$            1,1357.0OTHER: (1)SG&A expenses$        842,837$        734,22914.8SG&A as % revenues11.312.1SG&A as % gross profit75.476.4Operating margin %3.23.3Pretax margin %2.32.3FLOORPLAN EXPENSE:Floorplan interest$        (31,796)$         (27,687)14.8Floorplan assistance33,91526,14429.7Net floorplan income (expense)$            2,119$           (1,543)237.3(1)These amounts have been adjusted to exclude the impact of certain items to provide additional informationregarding the performance of our operations and improve period-to-period comparability. Refer to ourReconciliation of Certain Non-GAAP Financial Measures for a description of the aforementioned adjustments.  Group 1 Automotive, Inc.Additional Information - Same Store(1)(Unaudited)(Dollars in thousands, except per unit amounts)Three Months Ended December 31,20122011% ChangeREVENUES:New vehicle retail sales$    1,075,585$       928,76115.8Used vehicle retail sales389,675357,4419.0Used vehicle wholesale sales61,46558,1655.7Total used451,140415,6068.5Parts and service210,572201,8994.3Finance and insurance63,93552,78121.1Total $    1,801,232$    1,599,04712.6GROSS MARGIN %:New vehicle retail sales5.46.1Used vehicle retail sales7.88.0Used vehicle wholesale sales0.40.2Total used6.86.9Parts and service51.851.8Finance and insurance100.0100.0Total14.615.1GROSS PROFIT:New vehicle retail sales$         58,365$         56,2733.7Used vehicle retail sales30,56528,4627.4Used vehicle wholesale sales22713864.5Total used30,79228,6007.7Parts and service108,995104,5274.3Finance and insurance63,93552,78121.1Total $       262,087$       242,1818.2UNITS SOLD:Retail new vehicles sold30,76226,85114.6Retail used vehicles sold18,69717,4637.1Wholesale used vehicles sold9,3978,44911.2Total used28,09425,9128.4AVERAGE RETAIL SALES PRICE:New vehicle retail$         34,965$         34,5901.1Used vehicle retail$         20,842$         20,4691.8GROSS PROFIT PER UNIT SOLD:New vehicle retail sales$           1,897$           2,096(9.5)Used vehicle retail sales1,6351,6300.3Used vehicle wholesale sales241650.0Total used1,0961,104(0.7)Finance and insurance (per retail unit)$           1,293$           1,1918.6OTHER: (2)SG&A expenses$       198,054$       183,6217.9SG&A as % revenues11.011.5SG&A as % gross profit75.675.8Operating margin % 3.13.2FLOORPLAN EXPENSE:Floorplan interest$         (7,840)$         (7,321)7.1Floorplan assistance8,2007,08015.8Net floorplan income (expense)$              360$            (241)249.4Twelve Months Ended December 31,20122011% ChangeREVENUES:New vehicle retail sales$    3,932,266$    3,381,21616.3Used vehicle retail sales1,618,2721,409,25314.8Used vehicle wholesale sales254,052249,6931.7Total used1,872,3241,658,94612.9Parts and service826,119809,6322.0Finance and insurance242,706194,77524.6Total $    6,873,415$    6,044,56913.7GROSS MARGIN %:New vehicle retail sales5.76.2Used vehicle retail sales8.38.8Used vehicle wholesale sales1.11.6Total used7.37.7Parts and service52.352.4Finance and insurance100.0100.0Total15.115.8GROSS PROFIT:New vehicle retail sales$       223,503$       209,1366.9Used vehicle retail sales134,656123,7088.8Used vehicle wholesale sales2,6714,078(34.5)Total used137,327127,7867.5Parts and service432,415423,8532.0Finance and insurance242,706194,77524.6Total $    1,035,951$       955,5508.4UNITS SOLD:Retail new vehicles sold117,916101,26516.4Retail used vehicles sold79,09570,06912.9Wholesale used vehicles sold39,32235,68110.2Total used118,417105,75012.0AVERAGE RETAIL SALES PRICE:New vehicle retail$         33,348$         33,390(0.1)Used vehicle retail$         20,460$         20,1121.7GROSS PROFIT PER UNIT SOLD:New vehicle retail sales$           1,895$           2,065(8.2)Used vehicle retail sales1,7021,766(3.6)Used vehicle wholesale sales68114(40.4)Total used1,1601,208(4.0)Finance and insurance (per retail unit)$           1,232$           1,1378.4OTHER: (2)SG&A expenses$       776,672$       730,0366.4SG&A as % revenues11.312.1SG&A as % gross profit75.076.4Operating margin % 3.33.3FLOORPLAN EXPENSE:Floorplan interest$       (29,383)$       (27,486)6.9Floorplan assistance31,21625,88620.6Net floorplan income (expense)$           1,833$         (1,600)214.6(1)Same store amounts include the results for the identical months in each period presented in the comparison,commencing with the first full month we owned the dealership and, in the case of dispositions, ending withthe last full month we owned it. Same store results also include the activities of our corporate office.(2)These amounts have been adjusted to exclude the impact of certain items to provide additional informationregarding the performance of our operations and improve period-to-period comparability. Refer to ourReconciliation of Certain Non-GAAP Financial Measures for a description of the aforementioned adjustments.  Group 1 Automotive, Inc.Reconciliation of Certain Non-GAAP Financial Measures(Unaudited) (Dollars in thousands, except per share amounts)Three Months Ended December 31,NET INCOME RECONCILIATION:20122011% ChangeAs reported$    17,132$     20,855(17.9)  After-tax adjustments:Non-cash asset impairment charges(2)4,277461Net gain on dealership and real estate transactions (3)(276)-Severance costs (4)548-Insurance deductibles for Hurricane Sandy damage (5)1,219-Deal costs (6)1,111-Accrual for pending legal matters (7)-641Adjusted net income (1)$    24,011$     21,9579.4ADJUSTED NET INCOME ATTRIBUTABLE TO DILUTEDCOMMON SHARES RECONCILIATION:Adjusted net income$    24,011$     21,9579.4Less: Adjusted earnings allocated to    participating securities1,0661,182(9.8)Adjusted net income available to diluted common shares$    22,945$     20,77510.4DILUTED INCOME PER COMMON SHARE RECONCILIATION:As reported$        0.70$         0.90(22.2)  After-tax adjustments:Non-cash asset impairment charges0.180.02Net gain on dealership and real estate transactions(0.01)-Severance costs0.02-Insurance deductibles for Hurricane Sandy damage0.05-Deal costs0.05-Accrual for pending legal matters-0.02Adjusted diluted income per share (1)$        0.99$         0.945.3SG&A RECONCILIATION:As reported$  218,925$   188,10916.4  Pre-tax adjustments:Accrual for pending legal matters-(1,000)Net gain on dealership and real estate transactions437-Severance costs(774)-Insurance deductibles for Hurricane Sandy damage(1,916)-Deal costs(1,777)-Adjusted SG&A (1)$  214,895$   187,10914.9SG&A AS % REVENUES:Unadjusted11.311.6Adjusted (1)11.111.5SG&A AS % OF GROSS PROFIT:Unadjusted78.176.5Adjusted (1)76.776.1OPERATING MARGIN %:Unadjusted2.43.1Adjusted (1), (9)2.93.2PRETAX MARGIN %:Unadjusted1.42.1Adjusted (1), (9)2.02.2SAME STORE SG&A RECONCILIATION:As reported  Pre-tax adjustments:$  201,930$   184,6219.4Accrual for pending legal matters-(1,000)Net gain on dealership and real estate transactions153-Severance costs(336)-Insurance deductibles for Hurricane Sandy damage(1,916)-Deal costs(1,777)-Adjusted Same Store SG&A (1)$  198,054$   183,6217.9SAME STORE SG&A AS % REVENUES:Unadjusted11.211.5Adjusted (1)11.011.5SAME STORE SG&A AS % OF GROSS PROFIT:Unadjusted77.076.2Adjusted (1)75.675.8SAME STORE OPERATING MARGIN %:Unadjusted2.53.1Adjusted (1), (10)3.13.2CASH FLOWS FROM OPERATING ACTIVITIESRECONCILIATION:Net cash used in operating activities$  (68,031)$  (101,802)(33.2)Change in floorplan notes payable-credit facility,    excluding floorplan offset account and net acquisition    and disposition related activity69,749143,307Change in floorplan notes payable-manufacturer affiliates    associated with net acquisition and disposition related    activity(11,028)(7,134)Adjusted net cash provided by (used in)    operating activities(1)$    (9,310)$     34,371(127.1) Twelve Months Ended December 31, NET INCOME RECONCILIATION:20122011 % Change As reported$  100,209$     82,39421.6  After-tax adjustments:Non-cash asset impairment charges(2)4,3922,994Net gain on dealership and real estate transactions (3)(935)-Severance costs (4)548-Insurance deductibles for Hurricane Sandy damage (5)1,219-Deal costs (6)1,111-Accrual for pending legal matters (7)-641Hail storm insurance deductible (8)1,658-Adjusted net income (1)$  108,202$     86,02925.8ADJUSTED NET INCOME ATTRIBUTABLE TO DILUTEDCOMMON SHARES RECONCILIATION:Adjusted net income$  108,202$     86,02925.8Less: Adjusted earnings allocated to    participating securities5,4694,93110.9Adjusted net income available to diluted common shares$  102,733$     81,09826.7DILUTED INCOME PER COMMON SHARE RECONCILIATION:As reported$        4.19$         3.4720.7  After-tax adjustments:Non-cash asset impairment charges0.190.13Net gain on dealership and real estate transactions(0.04)-Severance costs0.02-Insurance deductibles for Hurricane Sandy damage0.05-Deal costs0.05-Accrual for pending legal matters-0.02Hail storm insurance deductible0.07-Adjusted diluted income per share (1)$        4.53$         3.6225.1SG&A RECONCILIATION:As reported$  848,446$   735,22915.4  Pre-tax adjustments:Accrual for pending legal matters-(1,000)Net gain on dealership and real estate transactions1,508-Severance costs(774)-Insurance deductibles for Hurricane Sandy damage(1,916)-Deal costs(1,777)-Hail storm insurance deductible(2,650)-Adjusted SG&A (1)$  842,837$   734,22914.8SG&A AS % REVENUES:Unadjusted11.312.1Adjusted (1)11.312.1SG&A AS % OF GROSS PROFIT:Unadjusted75.976.5Adjusted (1)75.476.4OPERATING MARGIN %:Unadjusted3.13.2Adjusted (1), (9)3.23.3PRETAX MARGIN %:Unadjusted2.12.2Adjusted (1), (9)2.32.3SAME STORE SG&A RECONCILIATION:As reported  Pre-tax adjustments:$  783,702$   731,0367.2Accrual for pending legal matters-(1,000)Net gain on dealership and real estate transactions(351)-Severance costs(336)-Insurance deductibles for Hurricane Sandy damage(1,916)-Deal costs(1,777)-Hail storm insurance deductible(2,650)-Adjusted Same Store SG&A (1)$  776,672$   730,0366.4SAME STORE SG&A AS % REVENUES:Unadjusted11.412.1Adjusted (1)11.312.1SAME STORE SG&A AS % OF GROSS PROFIT:Unadjusted75.776.5Adjusted (1)75.076.4SAME STORE OPERATING MARGIN %:Unadjusted3.13.2Adjusted (1), (10)3.33.3CASH FLOWS FROM OPERATING ACTIVITIESRECONCILIATION:Net cash provided by (used in) operating activities$  (75,322)$   199,316(137.8)Change in floorplan notes payable-credit facility,    excluding floorplan offset account and net    acquisition and disposition related activity245,544(13,350)Change in floorplan notes payable-manufacturer    affiliates associated with net acquisition and    disposition related activity(11,028)(33,712)Adjusted net cash provided by operating activities(1)$  159,194$   152,2544.6(1)We have included certain non-GAAP financial measures as defined under SEC rules, which exclude certainitems.  These adjusted measures are not measures of financial performance under GAAP.  As required bySEC rules, we provide reconciliations of these adjusted measures to the most directly comparable GAAPmeasures.  We believe that these adjusted financial measures are relevant and useful to investors becausethey improve the transparency of our disclosure, provide a meaningful presentation of results from our corebusiness operations and improve period-to-period comparability of our results from our core businessoperations. (2)Adjustment is net of tax benefit of $2,711 and $2,783 for the three and twelve months ended December 31,2012, respectively, and net of tax benefit of $336 and $1,811 for the three and twelve months endedDecember 31, 2011, respectively, calculated utilizing the applicable federal and state tax rates for theadjustment.(3)Adjustment is net of tax provision of $161 and $573 for the three and twelve months ended December 31,2012, respectively, calculated utilizing the applicable federal and state tax rates for the adjustment.(4)Adjustment is net of tax benefit of $226 for the three and twelve months ended December 31, 2012,respectively, calculated utilizing the applicable federal and state tax rates for the adjustment.(5)Adjustment is net of tax benefit of $697 for the three and twelve months ended December 31, 2012,respectively, calculated utilizing the applicable federal and state tax rates for the adjustment.(6)Adjustment is net of tax benefit of $666 for the three and twelve months ended December 31, 2012,respectively, calculated utilizing the applicable federal and state tax rates for the adjustment.(7)Adjustment is net of tax benefit of  $359 for the three and twelve months ended December 31, 2011,calculated utilizing the applicable federal and state tax rates for the adjustment.(8)Adjustment is net of tax benefit of $992 for the twelve months ended December 31, 2012, calculated utilizingthe applicable federal and state tax rates for the adjustment.(9)Excludes the impact of SG&A reconciling items above, as well as asset impairments.(10)Excludes the impact of Same Store SG&A reconciling items, as well as Same Store asset impairments.Adjusted Same Store Operating Income was $56,081, $51,448, $229,354, and $198,548 for the periodspresented respectively.SOURCE Group 1 Automotive, Inc.