UnitedAuto Reports Fourth Quarter Results

Total Revenues Increase 23%

Same-Store Retail Revenues Increase 7%

Excluding Prior Year Gain, Income from Continuing Operations Per Share Increases 18% to $0.33

BLOOMFIELD HILLS, Mich.--(BUSINESS WIRE)--United Auto Group, Inc. (NYSE: UAG), an international automotive retailer, today reported fourth quarter income from continuing operations of $31.1 million and related earnings per share of $0.33. Fourth quarter 2005 results included $5.2 million of after-tax earnings ($0.06 per share) attributable to the sale of all remaining variable profits relating to the pool of extended service contracts sold at the Companys dealerships from 2001 through 2005. Excluding the extended service contract gain from the prior year results, adjusted income from continuing operations and related earnings per share increased 16.1% and 17.9%, respectively, over the comparable period in 2005. Fourth quarter net income amounted to $29.9 million and related earnings per share was $0.32.

“Our used vehicle business was exceptionally strong in the quarter, with total used vehicle revenues growing nearly 44%. The increased level of this business, coupled with a challenging marketplace, contributed to an overall decrease in gross margin percentage during the fourth quarter.”

Revenues in the fourth quarter increased 22.8% to $2.9 billion, including a 7.1% increase in same-store retail revenues. The increase in same-store revenue was highlighted by 14.5% growth in used vehicle revenues and a 6.2% increase in service and parts revenues.

Commenting on the Companys results, Chairman Roger Penske said, Our business achieved solid same-store retail revenue growth during the fourth quarter, despite a difficult comparison to last year. I am pleased with the same-store results, especially in our service and parts operations which included 13.6% same-store growth in our international markets. These results highlight the benefit of our ongoing capital investment program. Penske continued, Our used vehicle business was exceptionally strong in the quarter, with total used vehicle revenues growing nearly 44%. The increased level of this business, coupled with a challenging marketplace, contributed to an overall decrease in gross margin percentage during the fourth quarter.

For the year ended December 31, 2006, revenues increased 16.4% to $11.2 billion. Full-year income from continuing operations amounted to $130.6 million and related earnings per share was $1.39. Excluding the extended service contract gain noted above from the prior year results, income from continuing operations and related earnings per share increased 14.7% and 14.9%, respectively, over the comparable period in 2005.

The Company currently estimates earnings from continuing operations to be in the range of $1.40 to $1.50 per share for the year ended December 31, 2007. This estimate includes an estimated $0.02 to $0.04 per share of costs associated with developing the distribution network for the smart product launch in the United States. First quarter 2007 earnings from continuing operations are estimated to be in the range of $0.26 to $0.30 per share. These estimates exclude a $12 million, or $0.13 per share, charge to be incurred in connection with the previously announced call of the Companys $300 million 9.625% Senior Subordinated Notes in March 2007. Earnings per share estimates are based on an estimated average of 94.6 million shares outstanding.

UnitedAuto will host a conference call discussing financial results relating to fourth quarter 2006 on Wednesday, February 14, 2007 at 2:00 p.m. EDT. To listen to the conference call, participants must dial (800) 553-5275 [International, please dial (612) 332-1210]. The call will be simultaneously broadcast over the Internet through the UnitedAuto website at www.unitedauto.com.

About UnitedAuto

United Auto Group, Inc., headquartered in Bloomfield Hills, Michigan, operates 314 retail automotive franchises, representing 41 different brands, and 26 collision repair centers. UnitedAuto, which sells new and previously owned vehicles, finance and insurance products and replacement parts, and offers maintenance and repair services on all brands it represents, has 169 franchises in 19 states and Puerto Rico and 145 franchises located outside the United States, primarily in the United Kingdom. UnitedAuto is a member of the Fortune 500 and Russell 1000 and has over 15,000 employees.

Statements in this press release may involve forward-looking statements. 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 that could affect UnitedAuto's future performance which are contained in UnitedAuto's Form 10-K for the year ended December 31, 2005 and its other filings with the Securities and Exchange Commission, and which are 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 certain non-GAAP financial measures as defined under SEC rules, such as adjusted income from continuing operations and related earnings per share, 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)

 

Fourth Quarter

2006  2005 
Revenues:
New Vehicle $1,587,023  $1,358,681 
Used Vehicle 680,384  472,776 
Finance and Insurance, Net 59,372  59,816 
Service and Parts 327,644  265,625 
Fleet and Wholesale Vehicle 226,594  189,432 
Total Revenues 2,881,017  2,346,330 
Cost of Sales:
New Vehicle 1,446,815  1,236,207 
Used Vehicle 625,889  432,099 
Service and Parts 147,654  119,047 
Fleet and Wholesale Vehicle 227,862  190,316 
Total Cost of Sales 2,448,220  1,977,669 
Gross Profit 432,797  368,661 
SG&A Expenses 350,939  284,097 
Depreciation and Amortization 12,476  9,697 

Operating Income

69,382  74,867 
Floor Plan Interest Expense (15,739) (12,460)
Other Interest Expense (14,702) (13,260)
Equity in Earnings of Affiliates 2,695  1,093 

Income from Continuing Operations Before Income Taxes and Minority Interests

41,636 

50,240 

Income Taxes (9,930) (17,651)
Minority Interests (636) (564)
Income from Continuing Operations 31,070  32,025 
Loss from Discontinued Operations, Net of Tax (1,171) (1,904)
Net Income $29,899  $30,121 
Income from Continuing Operations Per Diluted Share $0.33  $0.34 
Diluted EPS $0.32  $0.32 
Diluted Weighted Average Shares Outstanding 94,389  94,374 

UNITED AUTO GROUP, INC.

Consolidated Statements of Income

(Amounts In Thousands, Except Per Share Data)

(Unaudited)

 
Twelve Months
2006  2005 
Revenues:
New Vehicle $6,275,916  $5,601,187 
Used Vehicle 2,546,009  2,025,532 
Finance and Insurance, Net 249,581  229,575 
Service and Parts 1,246,288  1,043,859 
Fleet and Wholesale Vehicle 924,519  761,240 
Total Revenues 11,242,313  9,661,393 
Cost of Sales:
New Vehicle 5,727,135  5,106,889 
Used Vehicle 2,330,694  1,845,587 
Service and Parts 559,305  474,563 
Fleet and Wholesale Vehicle 920,710  760,903 
Cost of Sales 9,537,844  8,187,942 
Gross Profit 1,704,469  1,473,451 
SG&A Expenses 1,356,452  1,154,220 
Depreciation and Amortization 44,863  37,551 
Operating Income 303,154  281,680 
Floor Plan Interest Expense (61,565) (47,124)
Other Interest Expense (49,173) (49,004)
Equity in Earnings of Affiliates 8,201  4,271 

Income from Continuing Operations Before Income Taxes and Minority Interests

200,617 

189,823 

Income Taxes (67,845) (68,870)
Minority Interests (2,172) (1,814)
Income from Continuing Operations 130,600  119,139 
Loss from Discontinued Operations, Net of Tax (5,899) (166)
Net Income $124,701  $118,973 
Income from Continuing Operations Per Diluted Share $1.39  $1.27 
Diluted EPS $1.32  $1.27 
Diluted Weighted Average Shares Outstanding 94,178  93,932 

UNITED AUTO GROUP, INC.

Consolidated Condensed Balance Sheets

(Amounts In Thousands)

(Unaudited)

 
12/31/06  12/31/05 
Assets
Cash and Cash Equivalents $13,147  $8,957 
Accounts Receivable, Net 469,516  398,127 
Inventories 1,519,506  1,144,584 
Other Current Assets 71,490  50,209 
Assets Held for Sale 213,030  310,467 
Total Current Assets 2,286,689  1,912,344 
Property and Equipment, Net 582,646  416,099 
Intangibles 1,490,767  1,182,273 
Other Assets 142,783  83,457 
Total Assets $4,502,885  $3,594,173 
 
Liabilities and Stockholders Equity
Floor Plan Notes Payable $874,326  $785,237 
Floor Plan Notes Payable Non-Trade 297,985  318,034 
Accounts Payable and Accrued Expenses 515,111  368,874 
Current Portion Long-Term Debt 3,057  3,551 
Liabilities Held for Sale 52,150  189,239 
Total Current Liabilities 1,742,629  1,664,935 
Long-Term Debt 1,178,994  576,690 
Other Long-Term Liabilities 285,609  206,816 
Total Liabilities 3,207,232  2,448,441 
Stockholders Equity 1,295,653  1,145,732 
Total Liabilities and Stockholders Equity $4,502,885  $3,594,173 

UNITED AUTO GROUP, INC.

Selected Data

 
Fourth Quarter Twelve Months
2006  2005  2006  2005 
Total Retail Units
New Retail 43,463  38,899  183,370  167,956 
Used Retail 22,529  17,109  88,723  75,348 
Total Retail 65,992  56,008  272,093  243,304 
 
Same-Store Retail Units
New Same-Store Retail 39,120  38,592  163,253  163,233 
Used Same-Store Retail 18,189  16,869  75,601  72,687 
Total Same-Store Retail 57,309  55,461  238,854  235,920 
 
Same-Store Retail Revenue
New Vehicles $1,423,041  $1,349,041  $5,594,172  $5,472,566 
Used Vehicles 534,728  467,101  2,154,969  1,973,780 
Finance and Insurance, Net 53,733  59,412  226,399  224,594 
Service and Parts 279,247  262,988  1,091,642  1,021,030 
Total Same-Store Retail $2,290,749  $2,138,542  $9,067,182  $8,691,970 
 
Same-Store Retail Revenue Growth
New Vehicles 5.5% 4.5% 2.2% 5.8%
Used Vehicles 14.5% 4.6% 9.2% 4.4%
Finance and Insurance, Net (9.6%) (2.4%) 0.8% 9.7%
Service and Parts 6.2% 6.6% 6.9% 7.6%
 
Revenue Mix
New Vehicles 55.1% 57.9% 55.8% 58.0%
Used Vehicles 23.6% 20.2% 22.6% 21.0%
Finance and Insurance, Net 2.1% 2.5% 2.2% 2.4%
Service and Parts 11.4% 11.3% 11.1% 10.8%
Fleet and Wholesale 7.8% 8.1% 8.3% 7.8%
 
Average Retail Selling Price
New Vehicles $36,514  $34,928  $34,225  $33,349 
Used Vehicles $30,200  $27,633  $28,696  $26,882 
 
Gross Margin 15.0% 15.7% 15.2% 15.3%
 
Retail Gross Margin by Product
New Vehicle 8.8% 9.0% 8.7% 8.8%
Used Vehicle 8.0% 8.6% 8.5% 8.9%
Service and Parts 54.9% 55.2% 55.1% 54.5%
 
Gross Profit per Retail Transaction
New Vehicles $3,226  $3,149  $2,993  $2,943 
Used Vehicles 2,419  2,378  2,427  2,388 
Finance and Insurance 900  1,068  917  944 

UNITED AUTO GROUP, INC.

Selected Data (Continued)

 
Fourth Quarter Twelve Months
2006  2005  2006  2005 
Brand Mix:
BMW 21% 16% 18% 16%
Toyota/Lexus 20% 22% 21% 23%
Honda/Acura 14% 15% 16% 15%
DCX 12% 12% 11% 12%
Ford 9% 9% 10% 9%
Audi 7% 7% 7% 7%
General Motors 4% 5% 4% 5%
Porsche 4% 4% 4% 4%
Nissan/Infiniti 3% 3% 3% 3%
Other 6% 7% 6% 6%
100% 100% 100% 100%
 
Foreign / Premium 94% 93% 93% 92%
Domestic Big 3 6% 7% 7% 8%
100% 100% 100% 100%
 
Debt to Total Capital Ratio 48% 34% 48% 34%
 
Rent Expense $36,254  $29,492  $135,253  $109,715 

Contacts

United Auto Group, Inc.
Chief Financial Officer
Bob OShaughnessy, 248-648-2800
boshaughnessy@unitedauto.com
or
Senior Vice President
Tony Pordon, 248-648-2540
tpordon@unitedauto.com

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