HOUSTON – Group 1 Automotive, Inc., a Fortune 500 automotive retailer, reported that net income for the third quarter ended Sept. 30, 2006, increased 22.2 percent to $26.4 million, on revenues of $1.6 billion. Diluted earnings per share grew 25.0 percent to $1.10. This compares with net income of $21.6 million, or $0.88 per diluted share, in the third quarter of 2005.
Group 1's third-quarter performance featured rising used-vehicle gross profit to 8.5 percent, reflecting an increase of 4.8 percent in used retail revenues and a 7.2 percent increase in retail gross profits.
Group 1 achieved a 130 basis-point reduction in total selling, general and administrative expenses to 75.3 percent of gross profit, primarily attributable to gross profit improvements and its continued focus on increasing operating efficiencies.
Operating margin improved 60 basis points from the prior year to 3.6 percent, and pretax margin improved 40 basis points to 2.6 percent.
"Our margin improvements reflect management's continued focus on operations, particularly in our used-vehicle business, where gross profit per unit sold increased by more than 13 percent," said Earl J. Hesterberg, Group 1's president and chief executive officer. "The results we've delivered in this challenging new vehicle market are a testament to the success of the initiatives we are implementing and the strength of our management team."
On a same-store basis, total revenues were flat as strong Toyota new-vehicle sales and improved used-vehicle retail sales were offset by lower domestic new vehicle sales and a reduction in used-vehicle wholesale sales. Specifically, used-vehicle retail revenues increased 4.9 percent on 1.8 percent higher unit sales, and gross profit per retail unit increased $90 year over year. New vehicle revenues were basically flat as strong growth of 8.3 percent in import/luxury vehicle unit sales was offset by a 17.8 percent decrease in domestic brand sales. Parts and service revenues rose 1.5 percent, and finance and insurance revenues fell 0.1 percent. Total gross margin improved 20 basis points to 15.7 percent.
